Lear Corp Earnings: Margins Shrink Again, Net Income Falls

Lear Corporation (NYSE:LEA) reported its results for the second 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 fell to $145.4 million ($1.45 per share) vs. $177.5 million ($1.65 per share) a year earlier. This is a decline of 18.1% from the year-earlier quarter.

Revenue: Fell 0.3% to $3.67 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Lear Corporation beat the mean analyst estimate of $1.29 per share. Analysts were expecting revenue of $3.6 billion.

Quoting Management: “Lear performed well in the second quarter, despite challenging industry conditions in Europe,” said Matt Simoncini, Lear’s president and chief executive officer. “In both of our business units, we are continuing to win new business globally and improve operating efficiencies, while increasing our component capabilities in emerging markets.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins, as gross margin fell 0.8 percentage point to 8.6% from the year-earlier quarter. In that span, margins have contracted an average of 0.5 percentage point per quarter on a year-over-year basis.

A year-over-year revenue decrease last quarter snaps a streak of four consecutive quarters of revenue increases. The best quarter in that span was the third quarter of the last fiscal year, which saw revenue rise 22.7%.

The company’s net income has now fallen for three straight quarters. In the first quarter, net income fell 14% from the year earlier, while the figure fell 9.1% in the fourth quarter of the last fiscal year.

For three consecutive quarters, the company has topped analyst estimates. It beat the mark by 18 cents in the first quarter and by 9 cents in the fourth quarter of the last fiscal year.

Looking Forward: Expectations for the company’s next-quarter performance are higher than they were ninety days ago. Over the past three months, the average estimate for the third quarter has risen to $1.21 per share from $1.17. Over the past three months, the average estimate for the fiscal year has climbed from $5.12 per to share to $5.23.

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

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