Lear Corp. Earnings: Margins Expand and Profit Climbs

Lear Corporation (NYSE:LEA) reported net income above Wall Street’s expectations for the third quarter. Lear and its affiliates design and manufacture complete automotive seat systems and components as well as electrical distribution systems and electronic products.

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Lear Corporation Earnings Cheat Sheet

Results: Net income for Lear Corporation rose to $121.4 million ($1.23 per share) vs. $100.7 million (95 cents per share) in the same quarter a year earlier. This marks a rise of 20.6% from the year-earlier quarter.

Revenue: Rose 2.3% to $3.54 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Lear Corporation reported adjusted net income of $1.29 per share. By that measure, the company beat the mean estimate of $1.19 per share. Analysts were expecting revenue of $3.6 billion.

Quoting Management: “Lear performed well in the third quarter, with year-over-year improvements in sales, earnings and free cash flow,” said Matt Simoncini, Lear’s president and chief executive officer. “Despite a challenging operating environment in Europe, we remained solidly profitable in that region and increased earnings per share significantly from the prior year. We continue to win new business globally and strengthen our capabilities in emerging markets.”

Key Stats:

The company has now topped analyst estimates for the last four quarters. It beat the mark by 6 cents in the second quarter, by 18 cents in the first quarter, and by 9 cents in the fourth quarter of the last fiscal year.

Last quarter’s profit increase ends a three-quarter streak of profit decreases. In the second quarter, net income fell 18.1% from the year earlier, while the figure dropped 14% in the first quarter and 9.1% in the fourth quarter of the last fiscal year.

Last quarter, gross margins grew to 8.2%, a 0.1 percentage point difference from the year-earlier quarter. This snaps a streak of two consecutive quarters of shrinking margins.

Over the last five quarters, revenue has increased 7.9% on average year-over-year. The biggest increase came in the third quarter of the last fiscal year, when revenue rose 22.7% from the year-earlier quarter.

Looking Forward: For the next quarter, analysts are growing pessimistic about the company’s expected results. The average estimate for the fourth quarter is $1.32 per share, dropping from $1.34 a month ago. Over the past three months, the average estimate for the fiscal year has climbed from $5.19 per to share to $5.26.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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