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Lear’s stock tumbles as auto-parts maker reports earnings miss

  • Lear Corp. reports lower net income than anticipated
  • Key metrics show increases, but fall short of analyst expectations
  • Launch delays and lower electric vehicle program volumes impact sales backlog

Introduction

In a surprising turn of events, Lear Corp., the auto-parts maker, experienced a decline in its stock price as it failed to meet analysts’ expectations in net income. Despite posting increases in key metrics, such as net income and sales, the company’s earnings per share fell short of estimates. The disappointing results have raised concerns about the impact of launch delays and lower volumes on certain electric vehicle programs.

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Net Income and Earnings Per Share

Lear Corp. reported a net income of $127.3 million, or $2.18 per share, compared to $118 million, or $1.97 per share, in the same period last year. On an adjusted basis, the company earned $3.03 per share, up from $2.81 in the prior year’s quarter. However, analysts surveyed by FactSet were expecting adjusted earnings of $3.12 per share. The lower-than-expected earnings per share have led to a decline in the company’s stock price.

Sales Performance and Backlog

Despite falling short in earnings, Lear Corp. posted a 9% increase in sales, reporting $5.84 billion compared to $5.4 billion in the previous year’s quarter. However, this figure still fell short of analysts’ expectations, who were looking for sales of $5.7 billion. The company highlighted that launch delays and lower volumes on certain electric vehicle programs have impacted its sales backlog, which currently stands at $2.8 billion. Despite these challenges, Lear remains optimistic about its future revenue growth and sales diversification.

Cost of Sales and Full-Year Outlook

The company’s fourth-quarter cost of sales was $5.4 billion, compared to $5 billion in the prior year’s quarter. This figure also exceeded analysts’ estimates of $5.21 billion. Looking ahead, Lear Corp. expects full-year revenue between $24 billion and $24.6 billion. However, analysts surveyed by FactSet are projecting full-year sales of $24.4 billion. The company’s guidance assumes a 1% decrease in global industry production compared to 2023.

Conclusion

The disappointing earnings report from Lear Corp. has sent its stock price down by 6.2% in premarket trading. Despite reporting increases in key metrics, such as net income and sales, the company fell short of analysts’ expectations in earnings per share. The launch delays and lower volumes on certain electric vehicle programs have impacted the company’s sales backlog. Lear Corp. remains optimistic about its future revenue growth and sales diversification. As the auto-parts maker navigates these challenges, investors and industry experts will be closely monitoring its performance in the coming quarters.

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