Lear Corporation (LEA) | Investment Case

1. Company Snapshot

1.a. Company Description

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.

Show Full description

1.b. Last Insights on LEA

Lear Corporation's recent performance was driven by strong Q4 earnings, beating expectations with an EPS of $3.41 and a 5% year-over-year sales increase to $6 billion. Seating and E-Systems revenues were key contributors. Analysts reiterated a "Buy" rating, citing vertical integration, resilient margins, and disciplined buybacks as supportive of market-beating returns. Daiwa Securities Group Inc. also increased its stake in the company. With a solid financial outlook, Lear anticipates a return to positive topline and bottom-line expansion. (Source: Lear Q4 Earnings, Lear: A Solid Choice In Automotive Parts)

1.c. Company Highlights

Last Price	138.59
Change Percentage	-0.47%
Open	139.76
Previous Close	139.25
Market Cap ( Millions)	7374
Volume	704556
Year High	141.28
Year Low	73.85
M A 50	118.6
M A 200	104.36

FCF Yield	9.96%
Dividend Yield	2.22%
ROE	8.72%
Debt / Equity	52.74%
Net Debt / EBIDTA	144.39%
Price To Book	1.4
Price Earnings Ratio	16.66
Price To FCF	10.04
Price To sales	0.32
EV / EBITDA	7.67

2. Lear's Q4 and Full-Year 2025 Earnings: A Strong Performance

Lear Corporation reported a 5% increase in revenue for the fourth quarter, resulting in $23.3 billion for the full year 2025. The company's adjusted earnings per share (EPS) was $12.8, a 1% increase from 2024, with a fourth-quarter EPS of $3.41, beating analyst estimates of $2.67. The company's core operating earnings were $1.1 billion or 4.6% of net sales for the full year. The strong operating performance was driven by both the Seating and E-Systems segments, with net operating performance of $195 million, translating to 60 basis points in Seating and 110 basis points in E-Systems.

Publication Date: Feb -09

                                    📋 Highlights
                                    Revenue Growth::
                                                Full-year revenue reached $23.3 billion, a 5% increase YoY, with $6 billion in Q4 sales.
Core Operating Earnings::
                                                $1.1 billion for 2025, representing 4.6% of net sales, with 60 bps improvement in Seating and 110 bps in E-Systems.
New Business Awards::
                                                Secured $1.5 billion in Seating conquest pipeline, including awards with Chang'an, Dongfeng, LEAP Motor, and BYD in Q4.
Free Cash Flow & Share Repurchases::
                                                Generated $527 million free cash flow in 2025, enabling $325 million in share repurchases, exceeding the $75 million guidance.
2026 Outlook::
                                                Targets $23.2–$24 billion revenue, $1.03–$1.2 billion core operating earnings, and 40–80 bps margin improvement in both segments.

                                

Segment Performance

The Seating segment saw significant new business awards, including complete seat programs with Chang'an, Dongfeng, and LEAP Motor, while the E-Systems segment secured new business awards for nine wire harness programs and several electronics and connection system programs. The company's strong backlog, with approximately half of its revenue from new programs driven by ICE vehicles, provides a solid foundation for growth.

Outlook for 2026

Lear expects to deliver 40 basis points of net performance in Seating and 80 basis points in E-Systems in 2026. The company anticipates revenue to be in the range of $23.2 to $24 billion, with core operating earnings in the range of $1.03 billion to $1.2 billion. The expected growth is driven by the company's strong backlog, with a significant portion coming from new programs. Analysts estimate revenue growth of 3.0% for the next year, which is slightly conservative considering the company's guidance.

Valuation

Lear's current valuation metrics, including a P/E Ratio of 16.94 and an EV/EBITDA of 7.78, indicate a reasonable valuation. The company's Return on Equity (ROE) of 8.72% and Return on Invested Capital (ROIC) of 6.57% demonstrate its ability to generate returns for shareholders. With a Free Cash Flow Yield of 9.8%, Lear appears to be an attractive investment opportunity, especially considering its commitment to share repurchases, with a current authorization of $775 million remaining.

3. NewsRoom

Unlocking Lear (LEA) International Revenues: Trends, Surprises, and Prospects

Feb -09

Source: zacks.com

Lear Corporation (NYSE:LEA) Given Average Rating of “Hold” by Brokerages

Feb -09

Source: defenseworld.net

Lear Q4 Earnings Beat Expectations, Revenues Increase Y/Y

Feb -05

Source: zacks.com

Lear Corporation (LEA) Q4 2025 Earnings Call Transcript

Feb -04

Source: seekingalpha.com

Lear (LEA) Q4 Earnings: How Key Metrics Compare to Wall Street Estimates

Feb -04

Source: zacks.com

Lear Reports Fourth Quarter and Full Year 2025 Results

Feb -04

Source: prnewswire.com

Y Intercept Hong Kong Ltd Invests $692,000 in Lear Corporation $LEA

Feb -03

Source: defenseworld.net

Auto Sector Q4 Earnings: 4 Stocks With Surprise Potential

Jan -30

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.75%)

6. Segments

Seating

Expected Growth: 2.5%

Lear Corporation's 2.5% growth in seating is driven by increasing global vehicle production, rising demand for premium and electric vehicles, and growing adoption of advanced safety features. Additionally, Lear's focus on innovation, cost reduction, and strategic acquisitions have enabled the company to capitalize on these trends and maintain its market share.

E-Systems

Expected Growth: 3.5%

E-Systems from Lear Corporation's 3.5% growth is driven by increasing demand for electrification, autonomous driving, and connectivity in the automotive industry. Growing adoption of advanced safety features, rising sales of electric vehicles, and OEMs' focus on reducing emissions also contribute to this growth.

7. Detailed Products

Seating Systems

Lear Corporation designs and manufactures automotive seating systems, including seats, headrests, and armrests.

Electrical Systems

Lear Corporation develops and manufactures electrical systems, including electrical distribution systems, wiring harnesses, and battery systems.

E-Systems

Lear Corporation offers E-Systems, a range of electrification solutions, including electric motors, power electronics, and battery management systems.

Connected Systems

Lear Corporation develops and integrates connected systems, including infotainment systems, telematics, and autonomous driving technologies.

8. Lear Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Lear Corporation is medium due to the presence of alternative products and services in the automotive seating and electrical systems market.

Bargaining Power Of Customers

The bargaining power of customers for Lear Corporation is high due to the concentration of major automotive manufacturers, who have significant negotiating power.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Lear Corporation is medium due to the presence of multiple suppliers in the market, but with some concentration in certain areas.

Threat Of New Entrants

The threat of new entrants for Lear Corporation is low due to the high barriers to entry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry for Lear Corporation is high due to the presence of established competitors in the automotive seating and electrical systems market.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	37.27%
Debt Cost	4.51%
Equity Weight	62.73%
Equity Cost	11.75%
WACC	9.05%
Leverage	59.41%

11. Quality Control: Lear Corporation passed 2 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Visteon

A-Score: 6.2/10

Value: 7.9

Growth: 7.3

Quality: 7.2

Yield: 1.0

Momentum: 7.0

Volatility: 7.0

1-Year Total Return ->

Lear

A-Score: 6.0/10

Value: 7.7

Growth: 4.9

Quality: 4.2

Yield: 5.0

Momentum: 7.0

Volatility: 7.3

1-Year Total Return ->

LKQ

A-Score: 5.5/10

Value: 7.7

Growth: 5.4

Quality: 4.9

Yield: 6.0

Momentum: 2.5

Volatility: 6.7

1-Year Total Return ->

BorgWarner

A-Score: 5.3/10

Value: 5.7

Growth: 3.7

Quality: 4.2

Yield: 2.0

Momentum: 8.5

Volatility: 7.7

1-Year Total Return ->

Gentex

A-Score: 5.2/10

Value: 6.0

Growth: 5.6

Quality: 7.4

Yield: 3.0

Momentum: 2.0

Volatility: 7.3

1-Year Total Return ->

Dorman Products

A-Score: 5.1/10

Value: 4.5

Growth: 8.0

Quality: 6.5

Yield: 0.0

Momentum: 5.0

Volatility: 6.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

0.00%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

9.05%

Lear Corporation - US5218652049

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on LEA

1.c. Company Highlights

Less Volatile

Average Yield

Fairly Valued

Earnings Beats

Stable Momentum

Revenues Miss

Revenues Beats

Weak Momentum

Cheaper

Medium Volatility

Earnings Miss

2. Lear's Q4 and Full-Year 2025 Earnings: A Strong Performance

Segment Performance

Outlook for 2026

Valuation

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.75%)

6. Segments

Seating

Expected Growth: 2.5%

E-Systems

Expected Growth: 3.5%

7. Detailed Products

Seating Systems

Electrical Systems

E-Systems

Connected Systems

8. Lear Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Lear Corporation passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

138.59$

Current Price

138.59$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA