What’s Lear’s Fair Stock Price Estimate Based On Expected 2019 Earnings?

December 4th, 2019 by Trefis Team
+37.53%
Upside
94.53
Market
130
Trefis
LEA: Lear logo
LEA
Lear

Lear Corporation’s (NYSE: LEA) fair price estimate based on expected 2019 earnings is $134, according to Trefis estimates. This is higher than the current market price of around $121. Lear Corporation is a leading Tier 1 supplier to the global automotive industry. They supply seating, electrical distribution systems, and electronic modules, as well as related sub-systems, components, and software, to all of the world’s major automotive manufacturers. As of December 2018, they had 261 manufacturing, engineering, and administrative locations in 39 countries. In this note we discuss our stock price valuation for Lear Corporation. You can look at our interactive dashboard analysis ~ Lear Corporation Valuation: Cheap or Expensive? ~ for more details.

#1. Estimating Lear’s Total Revenues:

  • Total Revenues have increased from $18.6 billion in 2016 to $21.1 billion in 2018, but are expected to fall by 5.8% to $19.9 billion in 2019.  Our Interactive Dashboard Analysis, How Does Lear Make Money?, Provides An In Depth View Of The Company’s Revenues.
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#2. Deriving Lear’s Net Income:

  • Net Income Margin has slightly improved over the years from 5.5% in 2016 to 5.7% of Total Revenue in 2018. In 2019 Lear’s Margin is expected to be affected by the global auto market slowdown and fall to around 4.3% .

#3. Determining Lear’s EPS:

  • EPS has grown from $14.03 in 2016 to $18.28 in 2018, and we estimate it to be $14.29 in 2019.
  • EPS growth through 2018 can be attributed to higher Net Income and lower Shares Outstanding.

#4. Estimating Lear’s Share Price:

  • Our Price Estimate of $134 for Lear’s Stock is based on our Detailed Valuation Model, and implies a 9.4x P/E Multiple on expected 2019 EPS of $14.29
  • For further information on how Lear’s historical P/E fares with its peers please visit our interactive dashboard – Lear’s Valuation.

 

 

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