Lear Corp. Rallies on Plans to Close Eagle Ottawa Deal - Analyst Blog

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Shares of Lear Corp. ( LEA ) rose 0.9% and closed at $99.12 on Aug 20 after media reports revealed that the company is nearing the closing of the Eagle Ottawa LLC acquisition deal, involving over $800 million.

Auburn Hills, MI-based Eagle Ottawa is a supplier of premium automotive leather products utilized by different brands of vehicles including the likes of BMW, Buick, Honda Motor Co., Ltd. ( HMC ), Volvo, Renault, Chrysler and Mercedes-Benz. In 2006, Lear expanded its leather operations with the introduction of the Aventino premium leather for seat ventilation and customizable fabric.

Eagle Ottawa is currently owned by Milwaukee-based investment firm Everett Smith Group Ltd. The deal with Lear is expected to be completed in the next couple of weeks.

Lear posted adjusted earnings per share of $2.12 in the second quarter of 2014, marking a 31% rise from $1.62 in the year-ago quarter. Moreover, earnings beat the Zacks Consensus Estimate of $1.96. Adjusted net income amounted to $174 million, up 26% over the second quarter of 2013. Revenues increased 11% to $4.59 billion in the reported quarter, beating the Zacks Consensus Estimate of $4.44 billion.

For 2014, Lear anticipates revenues in the range of $17.6-$17.9 billion. Meanwhile, adjusted net earnings are forecasted in the $610-$645 million band for the year. Core operating earnings are estimated to come in between $975 million and $1.03 billion, up from the previous outlook of $935-$985 million.

Lear produces auto seats and electrical power systems for automakers like Ford Motor Co. ( F ), General Motors Company ( GM ) and BMW AG. Importantly, these companies generated 54% of Lear's sales in 2013.

Currently, Lear carries a Zacks Rank #3 (Hold).


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This article appears in: Investing , Business , Stocks

Referenced Stocks: F , HMC , LEA , GM

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