Lear (LEA) is drawing attention after recent trading data showed a 7.6% move over the past month and a 24.3% gain in the past 3 months, prompting closer scrutiny of its fundamentals.
See our latest analysis for Lear.
That recent 24.3% 3 month share price return comes on top of a 36.8% total shareholder return over the past year, while three and five year total shareholder returns are slightly negative. This suggests recent momentum is building off a softer longer term record.
If Lear has you looking more broadly at auto suppliers and manufacturers, it could be a good moment to scan auto manufacturers for other ideas in the same space.
With Lear trading around US$124.85, a value score of 4, an estimated 13% intrinsic discount and only a small gap to the latest analyst target, investors may ask whether there is still a buying opportunity here or whether the market is already pricing in future growth.
Compared with Lear’s last close of US$124.85, the most followed narrative points to a fair value of about US$118.83, using a 9.9% discount rate to frame that view.
The analysts have a consensus price target of $114.167 for Lear based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $136.0, and the most bearish reporting a price target of just $95.0.
Want to see what sits behind that fair value call? The narrative leans heavily on future earnings power, margin rebuilding and a lower valuation multiple than the sector. Curious which assumptions really carry the weight here?
Result: Fair Value of $118.83 (OVERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, weaker volumes on key customer platforms and ongoing E Systems headwinds through at least 2027 could easily upset the margin rebuild that analysts are banking on.
Find out about the key risks to this Lear narrative.
The narrative pricing points to Lear being about 5.1% overvalued versus a fair value of roughly US$118.83. Our DCF model, however, suggests the shares at US$124.85 sit around 13.4% below an estimated fair value of US$144.17. This frames the current price as potentially more of an opportunity than a risk. Which version of fair value do you find more convincing?
Look into how the SWS DCF model arrives at its fair value.
If you see the story differently or would rather test the assumptions yourself, you can build a custom view in just a few minutes: Do it your way.
A great starting point for your Lear research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.
Do not stop your research with a single stock; widen your watchlist with focused groups of companies that match the kind of opportunities you are really hunting for.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include LEA.
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