Lear Corp. (LEA) To Report Q3 Earnings: What's In The Cards?

Lear Corp. (NYSE:LEA) is set to release third-quarter 2017 results before the market opens on Oct 25.

Last quarter, the company delivered a positive earnings surprise of 5.78%. In fact, the company delivered a positive earnings surprise in each of the trailing four quarters, the average beat being 7.82%.

The Lear Corp. stock has gained 20.6% in the last three months, outperforming the 13.9% increase of the industry it belongs to.

Let’s see how things have shaped up for the forthcoming announcement.

Factors to Consider

Lear Corp. has raised 2017 outlook for earnings, sales and free cash flow. The company has projected sales of $20 billion and core operating earnings of about $1.65 billion, compared with $18.6 billion and $1.5 billion in 2016, respectively.

The company expects vehicle production in both Europe and Africa to improve 3% and 1% in China year over year in 2017. However, vehicle production in North America is expected to decline 2%. An adjusted net income is also expected to be $1.1 billion in 2017, up from the $1 billion, registered in 2016.

At the end of second-quarter 2017, Lear Corp. had a share repurchase authorization of $746 million till Dec 31, 2019. The recent acquisition of Grupo Antolin’s automotive seating business will help the company grow further with its experienced management and good-quality facilities that include high-utility and light-weight seat designs.

Earnings Whispers

Our proven model does not conclusively show if Lear Corp. is likely to beat estimates this quarter because it does not have the right combination of two key ingredients.

Zacks ESP: The Earnings ESP for Lear Corp. is -1.45% because the Most Accurate estimate of $3.75 is pegged below the Zacks Consensus Estimate of $3.80.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Lear Corp. currently carries a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of an earnings beat. Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks to Consider

Here are a few other stocks in the auto industry you may consider as our model shows that they have the right combination of elements to post an earnings beat this quarter.

Autoliv, Inc. (NYSE:ALV) has an earnings ESP of +0.51% and carries a Zacks Rank #2. The company is expected to report third-quarter 2017 financial results on Oct 26. You can see the complete list of today’s Zacks #1 Rank stocks here.

Horizon Global Corporation (NYSE:HZN) has an earnings ESP of +5.82% and carries a Zacks Rank #3. The company’s third-quarter 2017 financial results are expected to release on Oct 31.

Magna International Inc. (NYSE:MGA) has an earnings ESP of +1.91% and carries a Zacks Rank #2. The company’s third-quarter 2017 financial results are expected to release on Nov 9.

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