Shares of Lear Corp. experienced a decline of 6.2% in premarket trading on Tuesday, as the auto-parts maker failed to meet analysts’ expectations for net income, despite showing growth in key metrics.
Disappointing Net Income Results
Lear Corp. (LEA, -0.94%) reported net income of $127.3 million, equivalent to $2.18 per share, compared to $118 million, or $1.97 per share, during the same period last year. Adjusted earnings stood at $3.03 per share, compared to $2.81 per share in the previous year’s quarter. However, analysts surveyed by FactSet were anticipating adjusted earnings of $3.12 per share.
Strong Sales Performance
On the positive side, the company achieved $5.84 billion in sales, representing a 9% increase from the prior year’s quarter, where sales amounted to $5.4 billion. Nevertheless, analysts were projecting sales of $5.7 billion, slightly higher than the reported figure.
Sales Backlog and Challenges
Lear Corp. stated that its three-year core sales backlog currently stands at $2.8 billion, which is expected to contribute to continued global revenue growth and sales diversification. However, the backlog has encountered difficulties due to launch delays and lower-than-anticipated volumes in certain electric vehicle programs.
Fourth Quarter Cost of Sales
During the fourth quarter, Lear Corp. incurred total costs of sales amounting to $5.4 billion, in comparison to $5 billion during the same period in the preceding year. This was slightly lower than the analyst estimate of $5.21 billion.
Full-Year Revenue Outlook
Lear Corp. provided a revenue guidance range for the full year, expecting revenues between $24 billion and $24.6 billion. Analysts surveyed by FactSet, on the other hand, projected full-year sales of $24.4 billion. The company’s guidance assumes a 1% decrease in global industry production compared to 2023.
Recent Performance
Over the past 52 weeks, Lear Corp. shares have experienced a decline of 5%. In contrast, the S&P 500 index has shown a gain of 18.7%.
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