Lear Corporation stock is in a downtrend for last 5 years and is trading at $91 today. The stock had hit a high of $197 in 2021 and since then the stock has been sliding. However, the stock has show some support at the current levels. On charts, there is a likelihood for the stock to form inverse head & shoulder pattern but it is still in the forming. It still needs to cross $100 mark with significant volumes to continue the journey to $115 and above.
Let’s take a look at the fundamentals of the stock before we make our decision. Lear Corporation has a market capitalization of $4.88Bn with the P/E ratio of 10.5 which is way below its historical average for the last 5 years which is 32.5. So that gives us the comfort and may limit further downside in this stock. Since the stock is already trying to create its bottom, it may give some decent returns in the short term. However when I would be really interested in this stock would be when it crosses its upper trend line on a long term graph which would be above $115, which may have to be updated as the trend progresses.
Some of the other fundamentals which are promising is the dividend yield of the company which is 3.4%. That makes a compelling case for conservative investors to consider this investment decision. The reason I said conservative investor is because some of the other metrics of the organization may not be as appealing.
The company operates at 7.7% gross profit margin and return on assets of 3.8%. These numbers are not promising to expect significant returns from this stock.
Recent Financial Results
Lear’s first-quarter 2025 results (reported in early May 2025) showed solid operational performance despite industry headwinds. Revenue was $5.56 billion in Q1, down 7% year-over-year (from $6.00 billion), reflecting lower auto production on key platforms. Net income was $81 million ($1.49 per share), compared to $110 million ($1.90 per share) a year earlier. After adjusting for special items and restructuring, Q1 EPS was $3.12, slightly lower than $3.18 a year ago. Importantly, Lear beat consensus estimates: it earned $3.12 per share compared to the $2.64 expected, and it delivered $5.56 billion in sales versus the $5.47 billion forecast. Margins in both segments actually expanded – core operating earnings were $270 million (4.9% of sales) versus $280 million (4.7%) in Q1 2024. In short, Lear accelerated its operational improvement plans, reaching higher year-on-year margins despite lower production.
For the quarter, Lear had about $780 million in cash on hand (with $2.8 billion in total liquidity), and it remained shareholder-friendly. The company bought back $25 million worth of stock in Q1 and paid $43 million in dividends. Lear ended March with about $1.1 billion of its repurchase authorization remaining – it has already repurchased over 59 million shares totaling $5.6 billion since 2011. The dividend is $0.25 per quarter, yielding about 3.4% annually, which is attractive for value-oriented investors.
Some of other positive considerations is that the company have been buying back shares and most analysts have a target above $100 for Lear Corporation. Aside from the raw numbers, Lear’s management emphasized multiple new product awards and partnerships in Q1. Notably, in April, Lear gained operational control of a Chinese joint venture supporting BYD’s new Han L and Tai 3 vehicles. The company also won several major seating and systems contracts, including two ComfortFlex seating programs (with Volvo and Hyundai), complete seat systems for Chinese OEMs (BYD, FAW, and XPeng), and more than $750 million of new electrical distribution business in Lear’s E-Systems segment. Other wins include a wire harness contract with Ford in North America and Lear’s first BMW wire harness award in China.
Lear’s battery subsystem business also expanded, securing a next-generation battery disconnect unit (BDU) program with a major automaker. Additionally, Lear received a 2025 Automotive News PACE Award for its new Zone Control Module technology. These developments highlight Lear’s growing presence in advanced EV and connectivity components, which should help drive future revenue as the auto market gradually recovers.
To conclude, if you are looking for 10-12% return in the next 12 months, Lear Corporation could be worth a shot but since we all have limited funds, we might look for alternate stocks with higher growth trajectory.
