Lear Corp

LEA

Motor Vehicle Parts & Accessories

Mkt Cap

$7.17B

PE

13.31

Debt

$2.77B

Cash

$932.4M

EV

$9.008B

FCF

$622M

Market Cap

$7.17B

P/E Ratio

13.31

Debt

$2.77B

Cash

$932.4M

EV

$9.008B

FCF

$622M

Charts data: {"Earnings":[{"time":"2014-12-30","value":672400000},{"time":"2015-12-30","value":745500000},{"time":"2016-12-30","value":975100000},{"time":"2017-12-30","value":1287900000},{"time":"2018-12-30","value":1139400000},{"time":"2019-12-30","value":753600000},{"time":"2020-12-30","value":158500000},{"time":"2021-12-30","value":373900000},{"time":"2022-12-30","value":327700000},{"time":"2023-12-30","value":572500000}],"Sales":[{"time":"2014-12-30","value":17727300000},{"time":"2015-12-30","value":18211400000},{"time":"2016-12-30","value":18557600000},{"time":"2017-12-30","value":20467000000},{"time":"2018-12-30","value":21148500000},{"time":"2019-12-30","value":19810300000},{"time":"2020-12-30","value":17045500000},{"time":"2021-12-30","value":19263100000},{"time":"2022-12-30","value":20891500000},{"time":"2023-12-30","value":23466900000}],"Net Margins":[{"time":"2014-12-30","value":0.037930198056105556},{"time":"2015-12-30","value":0.04093589729510087},{"time":"2016-12-30","value":0.052544510065956805},{"time":"2017-12-30","value":0.0629256852494259},{"time":"2018-12-30","value":0.053876161429888644},{"time":"2019-12-30","value":0.038040817150674144},{"time":"2020-12-30","value":0.009298641870288346},{"time":"2021-12-30","value":0.019410167626186855},{"time":"2022-12-30","value":0.015685805231792836},{"time":"2023-12-30","value":0.024396064243679395}],"Assets":[{"time":"2014-12-30","value":9150200000},{"time":"2015-12-30","value":9405800000},{"time":"2016-12-30","value":9900600000},{"time":"2017-12-30","value":11945900000},{"time":"2018-12-30","value":11600700000},{"time":"2019-12-30","value":12680700000},{"time":"2020-12-30","value":13198600000},{"time":"2021-12-30","value":13352400000},{"time":"2022-12-30","value":13763000000},{"time":"2023-12-30","value":14695500000}],"Stockholders Equity":[{"time":"2014-12-30","value":3029300000},{"time":"2015-12-30","value":3017700000},{"time":"2016-12-30","value":3192900000},{"time":"2017-12-30","value":4292600000},{"time":"2018-12-30","value":4360600000},{"time":"2019-12-30","value":4501100000},{"time":"2020-12-30","value":4614900000},{"time":"2021-12-30","value":4808400000},{"time":"2022-12-30","value":4830300000},{"time":"2023-12-30","value":5060600000}],"ROE":[{"time":"2014-12-30","value":0.2219654705707589},{"time":"2015-12-30","value":0.24704244954766874},{"time":"2016-12-30","value":0.30539634814745215},{"time":"2017-12-30","value":0.30002795508549596},{"time":"2018-12-30","value":0.261294317295785},{"time":"2019-12-30","value":0.1674257403745751},{"time":"2020-12-30","value":0.0343452729203233},{"time":"2021-12-30","value":0.0777597537642459},{"time":"2022-12-30","value":0.06784257706560669},{"time":"2023-12-30","value":0.11312887799865629}],"ROA":[{"time":"2014-12-30","value":0.10154969290288737},{"time":"2015-12-30","value":0.12617746496842375},{"time":"2016-12-30","value":0.14415287962345716},{"time":"2017-12-30","value":0.13497517976879098},{"time":"2018-12-30","value":0.142586223245149},{"time":"2019-12-30","value":0.08439597183120806},{"time":"2020-12-30","value":0.03440516418408013},{"time":"2021-12-30","value":0.05058266678649531},{"time":"2022-12-30","value":0.04754050715686987},{"time":"2023-12-30","value":0.06350243271749856}]}

Lear Corporation designs, develops, engineers, manufactures, assembles, and supplies automotive seating, and electrical distribution systems and related components for automotive original equipment manufacturers in North America, Europe, Africa, Asia, and South America. Its Seating segment offers seat systems, seat subsystems, keyseat components, seat trim covers, seat mechanisms, seat foams, and headrests, as well as surface materials, such as leather and fabric for automobiles and light trucks, compact cars, pick-up trucks, and sport utility vehicles. The company's E-Systems segment provides electrical distribution and connection systems that route electrical signals and networks; and manage electrical power within the vehicle for various powertrains. This segment's products comprise wire harnesses, terminals and connectors, engineered components, and junction boxes; electronic system products, including body domain control modules, smart and passive junction boxes, gateway and communication modules, integrated power modules, and high voltage switching and power control systems. It also offers software and connected services comprising Xevo Market, an in-vehicle commerce and service platform; and software and services for the cloud, vehicles, and mobile devices. In addition, this segment provides cybersecurity software; advanced vehicle positioning for automated and autonomous driving applications; and short-range communication and cellular protocols for vehicle connectivity. It offers its products and services under the XEVO, GUILFORD, EAGLE OTTAWA, ConfigurE+, INTUTM, LEAR CONNEXUSTM, EXO, JOURNEYWARE, ProTec, SMART JUNCTION BOX, STRUCSURE, AVENTINO, and TeXstyle brands. Lear Corporation was founded in 1917 and is headquartered in Southfield, Michigan.

Sector

10-Q
9/30/23
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7/1/23
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10-K
12/31/22
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12/31/21
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10-K
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10-Q
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6/29/19
10-Q
3/30/19
10-K
12/31/18
10-Q
9/29/18
10-Q
6/30/18
10-Q
3/31/18
10-K
12/31/17

DCF

Discounted Cash Flow Valuation of Lear Corp

Calculate

Growth Years

Growth

Start

End

Discount

Start

End

Multiple

g\r	+10%	+11%	+12%	+13%	+14%
0%	10	9	8	8	7
+1%	11	10	9	8	8
+2%	13	11	10	9	8
+3%	14	13	11	10	9
+4%	17	14	12	11	10

Years	0	1	2	3	4	5	6	7	8	9	10	TV
FCF	$622M	$503.3M	$407.3M	$329.6M	$266.7M	$215.9M	$174.7M	$141.4M	$114.4M	$92.56M	$74.91M	$749.1M
DCF		$437.7M	$308M	$216.7M	$152.5M	$107.3M	$75.52M	$53.14M	$37.39M	$26.31M	$18.52M	$185.2M
Value	$1.618B

Chart P/E ratio

In the chart Earnings are multiplied by this value.

Earnings Growth -15%

Earnings Stability 31%

Competitiveness and MOAT

High margins render the company resilient under dire circumstances, hence able to drive competitors out or acquire them. ROE and ROA measure the average flow generated by each invested dollar. Their marginal value is a forecast of future growth, and it is considered by Buffett and Munger the most important single indicator.

The Net Margin is too low to guarantee profitability in case of higher costs or higher interest rates. Furthermore lower margins cause higher earnings’ volatility.

Over time the ROA has been decreasing indicating a lower marginal ROA with respect to the calculated one, this could impede growth.

Years	12-2015	12-2016	12-2017	12-2018	12-2019	12-2020	12-2021	12-2022	12-2023	TTM
Net Margin	4.1%	5.3%	6.3%	5.4%	3.8%	0.93%	1.9%	1.6%	2.4%	2.3%
ROA	13%	14%	13%	14%	8.4%	3.4%	5.1%	4.8%	6.4%	6%
ROE	25%	31%	30%	26%	17%	3.4%	7.8%	6.8%	11%	11%

What is the average Net Margin?

The average Net Margin over the past 5 years is +2.68%.

What is the trend of Net Margin?

The trend of Net Margin over the past 5 years is -0.58%.

What is the average Return on Assets (ROA)?

The average ROA over the past 5 years is +7.05%.

What is the trend of Return on Assets (ROA)?

The trend of ROA over the past 5 years is -1.4%.

What is the average Return on Equity (ROE)?

The average ROE over the past 5 years is +12.03%.

What is the trend of Return on Equity (ROE)?

The trend of ROE over the past 5 years is -2.85%.

Safety & Stabiliy

Being debt the number one cause of investment losses and company death, the ratio Debt/FCF is of utmost importance to guarantee safety. On the other hand the Graham’s stability measures the drawdown of earnings, hence indicating the reliability of the flow generated by the company.

The company has high debt with respect to the cashflow it generates.

The Graham’s stability indicate a relevant drawdown, consider checking when it has occured and why.

Years	12-2015	12-2016	12-2017	12-2018	12-2019	12-2020	12-2021	12-2022	12-2023	TTM
Debt FCF	2.53	1.81	1.67	1.80	3.46	11.07	30.60	6.81	4.46	4.45
Debt Equity	0.66	0.62	0.46	0.45	0.52	0.51	0.54	0.54	0.55	0.56
MIN
Graham Stability	-	-	100%	100%	66%	15%	55%	76%	100%	15%

What is the Debt/FCF?

The Debt/FCF trailing twelve month is 4.45.

What is the trend of Debt/FCF?

The trend of Debt/FCF over the past 5 years is 1.23.

What is the Graham’s Stability?

Graham’s Stability measure stands at 0.15.

Growth

Growth can be dangerous when forecasting, simply projecting the current growth is in general wrong. A company passes through multiple phases, from being young and unprofitable, to the first periods of profitability and high growth, until it arrives at a period of regime with limited growth. Identifying in which phase the company is in may help forecasting.

Earnings growth has been increasing in past years.

Years	12-2016	12-2018	12-2020	12-2022	Trend
Revenue	3.4%	2.1%	11%	12%	0.77%
Net Income	-7.3%	-13%	53%	75%	4.4%
Stockholders Equity	6.8%	3%	3.1%	4.8%	-0.92%
FCF	-7.7%	-11%	43%	63%	13%

What is the 5 year Revenue CAGR?

The Revenue CAGR over the past 5 years is +2.1%.

What is the trend of Revenue growth?

The trend of Revenue growth rate over the past 5 years is +0.77%.

What is the 5 year Earnings CAGR?

The Earnings CAGR over the past 5 years is -12.86%.

What is the trend of Earnings growth?

The trend of Earnings growth rate over the past 5 years is +4.43%.

What is the 5 year Equity CAGR?

The Equity CAGR over the past 5 years is +3.02%.

What is the trend of Equity growth?

The trend of Equity growth rate over the past 5 years is -0.92%.

What is the 5 year FCF CAGR?

The FCF CAGR over the past 5 years is -10.8%.

What is the trend of FCF growth?

The trend of FCF growth rate over the past 5 years is +12.71%.