Lear Corporation (LEA)
Valuation Overview•Is Lear Corporation Overvalued or Undervalued?
Trading at a discount to intrinsic cash flow value, implying pessimistic long-term market expectations.
Fragile underlying quality score of 43/100; weak margins or elevated debt leverage warrant caution.
Wall Street forecasts a balanced outlook with consensus price targets near the current price.
Verdict: Average quality business weighed down by significant profitability concerns.
Wall Street sentiment is generally neutral alongside robust expected earnings growth. This outlook is strongly supported by highly attractive capital returns, driven by a balanced mix of reliable dividends and share buybacks.
LEA struggles with subpar profitability and pressured margins. This is paired with a moderately leveraged but stable balance sheet.
The company exhibits steady, low-single-digit revenue growth paired with robust earnings compounding (14.2% EPS 3Y CAGR). However, profitability remains a major concern with severely compressed operating margins (3.2%).
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $5.8B | -0.2% | +3.7% | +6.4% | +2.5% | |
| EBITDA | $0.00 | — | +6.6% | — | — | |
| Net Income | $172.3M | -13.8% | +10.1% | — | -5.2% | |
| EPS (Diluted) | $3.34 | -9.1% | +14.2% | +25.5% | -1.6% | |
| Free Cash Flow | -$26.5M | -6.1% | +11.2% | +20.1% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 5.3% | 7.9% | 7.8% | 9.1% |
| Operating Margin | 3.2% | 4.1% | 4.0% | 5.5% |
| Net Margin | 2.2% | 2.2% | 2.0% | 3.2% |
| FCF Margin | 3.1% | 2.4% | 1.9% | 3.1% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $3.44 | $3.87 | +12.5% | ||
| Q1'26 | $2.67 | $3.41 | +27.7% | ||
| Q4'25 | $2.70 | $2.79 | +3.3% | ||
| Q3'25 | $3.23 | $3.47 | +7.4% | ||
| Q2'25 | $2.64 | $3.12 | +18.2% | ||
| Q1'25 | $2.50 | $2.94 | +17.6% | ||
| Q4'24 | $2.63 | $2.89 | +9.9% | ||
| Q3'24 | $3.40 | $3.60 | +5.9% |
Total return is +56.5% (1Y), outperforming the benchmark by +31.5%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +19.1% | +9.8% | — |
| 1Y | +56.5% | +31.5% | +3.4% |
| 3YCAGR | +1.5% | -18.5% | +6.5% |
| 5YCAGR | -1.8% | -15.0% | +8.9% |
| 10YCAGR | +3.4% | -10.0% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about Lear Corporation (LEA) valuation, health, and returns.
Lear Corporation is estimated to be undervalued under our discounted cash flow framework. relative multiples indicate the stock is Fair versus peers compared to industry peers. undervalued (implying +21.8% upside to DCF intrinsic value of $170.17)
Lear Corporation has multiple valuation anchors: DCF Intrinsic Value: $170.17 | Peer Relative Fair Value: $142.68 | Wall Street Analyst Target: $134.86 (implying -3.5% upside). A convergence of these signals offers higher conviction.
Lear Corporation displays fair financial health with a composite quality score of 43/100, supported by a Altman Z-Score of 2.7 (grey zone), Piotroski F-Score of 7/9, Return on Invested Capital (ROIC) of 9.7%.
Lear Corporation pays a 2.2% dividend yield, covered by a 38% payout ratio with 0 years of growth, supplemented by a 4.6% buyback yield.
Lear Corporation's current growth trajectory is Decelerating. The company achieved -0.2% 1Y revenue growth and -9.1% 1Y EPS growth, compared to its 3Y revenue CAGR of +3.7%.
Wall Street consensus is Hold based on 31 analysts, beating EPS expectations in 92% of recent quarters with a 9-quarter streak. The consensus price target represents a -3.5% change from current levels.
Investment risks for Lear Corporation include: -19.5% 1-year max drawdown. Volatility risk is characterized by a beta of 1.13x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.