Moody's Investors Service has reaffirmed Ba2 Corporate Family
and Ba2-PD Probability of Default ratings on
). The rating agency raised the rating outlook on the company to
positive from stable. Also, the agency reiterated other ratings
on Lear Corp., like the senior unsecured notes rating at Ba2 and
the Speculative Grade Liquidity Rating at SGL-1.
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Moody's reaffirmed the rating and increased the outlook as it
expects Lear Corp. to record continued free cash flow generation
and higher margins in the near future, even with flat
year-over-year auto sales in North America. Lear Corp. expects
profit margins to increase in the seating business by 5% in 2014
on better performance and lower launch costs in the segment.
Reaffirmation of the SGL-1 rating indicates Lear Corp.'s enhanced
liquidity profile over the next twelve months together with
strong balance sheet and positive free cash flow generation. In
the first nine months of 2013, cash flow from operating
activities increased 19.1% to $429.6 million from $360.7 million
in the same period of 2012.
Lear Corp. posted a 12.4% rise in adjusted earnings per share to
$1.45 in the third quarter of 2013 compared with $1.29 per share
in the year-ago quarter. Earnings surpassed the Zacks Consensus
Estimate by 13 cents. Revenues increased 10.7% to $3.92 billion
in the reported quarter, beating the Zacks Consensus Estimate of
For full-year 2013, Lear Corp. anticipates revenues of $16
billion, up from the prior expectation of $15.8 billion. The
company expects industry vehicle production of 19.5 million units
in Europe and Africa, up 1% from the prior outlook. However, it
retained its expectations of industry vehicle production at 16.2
million units in North America and 18.7 million units in China.
Adjusted net earnings are expected to be $505 million for the
year. Core operating earnings are anticipated to be roughly $835
million, up from the previous outlook of $750-$800 million.
Lear Corp. designs, manufactures, assembles and supplies
automotive seat systems, electrical distribution systems, and
related components primarily to automotive original equipment
manufacturers. The company sells its products chiefly in North
America, South America, Europe and Asia. The company retains a
Zacks Rank #3 (Hold).
Some other stocks that are performing well in the industry where
Lear Corp. operates are
American Axle & Manufacturing Holdings Inc.
). While Visteon and Gentex sport a Zacks Rank #1 (Strong Buy),
American Axle carries a Zacks Rank #2 (Buy).