Why Is Lear (LEA) Down 10.4% Since Last Earnings Report?

It has been about a month since the last earnings report for Lear (LEA). Shares have lost about 10.4% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Lear due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent catalysts for Lear Corporation before we dive into how investors and analysts have reacted as of late.

Lear Q4 Earnings Beat Expectations

Lear reported fourth-quarter 2025 adjusted earnings per share of $3.41, which beat the Zacks Consensus Estimate of $2.67, thanks to better-than-expected revenues from the Seating and E-Systems segments. The bottom line also increased from $2.94 reported in the year-ago quarter. In the reported quarter, revenues increased 5% year over year to $6 billion and surpassed the Zacks Consensus Estimate of $5.80 billion.

Segmental Performance

Sales of the Seating segment totaled $4.41 billion in the reported quarter, up from $4.19 billion generated in the year-ago quarter. The segment’s sales also surpassed the Zacks Consensus Estimate of $4.24 billion. Adjusted segment earnings amounted to $263 million, up from $257 million reported in the corresponding quarter of 2024 and beat the Zacks Consensus Estimate of $243 million. The segment recorded an adjusted margin of 6% of sales, down from 6.1% recorded in the previous year’s quarter.

Sales of the E-Systems segment totaled $1.58 billion, rising from $1.53 billion in the year-ago period and also topping the Zacks Consensus Estimate of $1.53 billion. Adjusted segmental earnings amounted to $83.7 million, up from $76.7 million in the corresponding quarter of 2024. The figure also surpassed the Zacks Consensus Estimate of $70 million. For the E-Systems segment, the adjusted margin was 5.3% of sales, up from 5% in the year-ago quarter.

Performance by Region

Sales in the North America region increased 6% year over year to $2.46 billion in the quarter under review and surpassed the Zacks Consensus Estimate of $2.39 billion.

Sales in the Europe and Africa region rose 3% year over year to $2.04 billion, marginally missing the Zacks Consensus Estimate of $2.05 billion.

Sales in the Asia region totaled $1.26 billion in the quarter, which increased 4.5% year over year and surpassed the Zacks Consensus Estimate of $1.16 billion.

Sales in the South America region totaled $232.3 million in the quarter, rising from $213.5 million generated in the year-ago period and exceeding the Zacks Consensus Estimate of $217 million.

Financial Position & Other Tidbits

The company had $1.03 billion in cash and cash equivalents as of Dec. 31, 2025, compared with $1.05 billion as of Dec. 31, 2024. Long-term debt was $2.71 billion as of Dec. 31, 2025, slightly down from $2.73 billion as of Dec. 31, 2024.

During the quarter under discussion, net cash provided by operating activities totaled $476 million. The company posted an FCF of $281 million in the quarter.

During the quarter, LEA repurchased 1,632,456 shares of its common stock for a total of $175 million. At the end of the quarter, Lear had a remaining share repurchase authorization of nearly $775 million.

2026 Guidance

Lear projects its full-year net sales in the band of $23,210-$24,010 million compared to $23,259 million reported in 2025. Core operating earnings are envisioned in the range of $1.03-$1.2 billion compared to $1.06 billion in 2025. FCF is projected in the band of $550-$650 million, higher than the $427 million reported in 2025. Capital spending is expected to be $660 million compared to $561 million in 2025. Adjusted EBITDA is expected to be between $1.65 billion and $1.82 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a flat trend in estimates revision.

VGM Scores

At this time, Lear has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock has a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Lear has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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This article originally published on Zacks Investment Research (zacks.com).

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