Why Lear (LEA) Stock Is Up Today

NEW YORK (TheStreet) -- Lear Corp. (LEA)  said it agreed to acquire the world's largest supplier of automotive leather, Eagle Ottawa LLC, for $850 million, Crain's reports.

Lear expects to close on the deal, which will be funded through a combination of cash on hand and debt, in the first quarter of 2015.

Shares of Lear are up 1.06% to $99.15 in pre-market trade.

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TheStreet Ratings team rates LEAR CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate LEAR CORP (LEA) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, increase in net income, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • LEA's revenue growth has slightly outpaced the industry average of 9.0%. Since the same quarter one year prior, revenues rose by 11.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 39.97% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, LEA should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Auto Components industry average. The net income increased by 8.2% when compared to the same quarter one year prior, going from $137.30 million to $148.50 million.
  • Net operating cash flow has increased to $229.20 million or 13.69% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -23.23%.
  • LEAR CORP has improved earnings per share by 13.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, LEAR CORP reported lower earnings of $4.99 versus $13.00 in the prior year. This year, the market expects an improvement in earnings ($7.97 versus $4.99).
  • You can view the full analysis from the report here: LEA Ratings Report
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