Lear Corp (LEA) stock analysis

P/E below its 5-year median

Lear's P/E of 9.5 is below its own 5-year median of 14.5.

P/E below the industry

Lear's P/E of 9.5 is below the Motor Vehicles and Motor Vehicle Equipment median of 17.4.

EV/EBITDA below its 5-year median

Lear's EV/EBITDA of 4.9 is below its 5-year median of 6.5.

P/B below the industry

Lear's price-to-book of 1.05 is below the Motor Vehicles and Motor Vehicle Equipment median of 1.57.

Trading below fair value

The share price of $108.71 is below our fair value estimate of $173.15.

Margin of safety over 20%

The price is 37.2% below fair value, more than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew 3.6% a year over the last three fiscal years, short of the 10% we look for.

EPS growing 10%+ a year

Diluted EPS grew 14.2% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 32.2% over the last twelve months, against a 5-year average of 22.5% a year.

Growing slower than the industry

Revenue grew 3.5% over the last twelve months; the Motor Vehicles and Motor Vehicle Equipment median is 5.5%.

Guidance raised

Lear raised its Full Year 2026 Net Sales outlook on Jul 31, 2026.

Gross margin improving

Gross margin was 6.9% over the last twelve months, against 6.7% a year earlier.

Return on equity under 15%

Return on equity was 11.6% over the last twelve months and averaged 9.4% over five years; we look for 15% on both.

Return on capital over 10%

Return on invested capital was 10.2%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Lear's return on equity of 11.6% is above the Motor Vehicles and Motor Vehicle Equipment median of 3.5%.

Earnings grew over 5 years

Net income grew 22.5% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 2.5% over the last twelve months, against a 5-year average of 2.0%.

Net margin above the industry

Lear's net margin of 2.5% is above the Motor Vehicles and Motor Vehicle Equipment median of 1.9%.

High debt

Debt is 54.9% of shareholders' equity, above the 40% we consider low.

Debt rising against equity

Debt to equity rose from 51.8% five years ago to 54.9%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 49.7% of total debt.

Interest well covered

Operating income covers interest expense 9.1 times.

Short-term assets cover short-term debts

Current assets are 1.18 times current liabilities.

Bankruptcy risk in the grey zone

The Altman Z-score is 2.75; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Lear paid dividends worth 2.8% of the share price over the last twelve months.

Yield below Treasuries

The 2.8% yield is below the 4.7% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Lear yields 2.8%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 8 fiscal years.

Covered by earnings

Dividends take 27.1% of net income.

Covered by free cash flow

Dividends take 22.6% of free cash flow.