NEW YORK (
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, attractive valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- LEA's revenue growth has slightly outpaced the industry average of 8.4%. Since the same quarter one year prior, revenues rose by 11.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- LEA's debt-to-equity ratio is very low at 0.27 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.19, which illustrates the ability to avoid short-term cash problems.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Auto Components industry and the overall market, LEAR CORP's return on equity exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has increased to $273.80 million or 15.13% when compared to the same quarter last year. In addition, LEAR CORP has also vastly surpassed the industry average cash flow growth rate of -68.18%.
Lear Corporation designs, manufactures, assembles, and supplies automotive seat systems, electrical distribution systems, and related components primarily to automotive original equipment manufacturers. It operates in two segments, Seating and Electrical Power Management Systems (EPMS). The company has a P/E ratio of 8.9, above the average automotive industry P/E ratio of 8.3 and below the S&P 500 P/E ratio of 17.7. Lear has a market cap of $4.34 billion and is part of the
industry. Shares are up 14.9% year to date as of the close of trading on Friday.
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-- Written by a member of TheStreet RatingsStaff