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Global Vehicle Production Ripples Benefit Lear Corporation and Automotive Market

December 13, 2013 | About:
Sally Jones

Sally Jones

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Eleven billionaire investors hold Lear Corporation (LEA), a leading global supplier of automotive seating and electrical distribution systems, reporting a strong third quarter. With third quarter reports that global vehicle production is up by 4% from a year ago, production increases will ripple across all of the major automotive markets in the world. Lear will be ready with a new seating manufacturing plant in Romania, opening in January to serve all major European automotive manufacturers.

Incorporated in 1987, Lear Corporation and its affiliates design and manufacture complete automotive seat systems and components, as well as electrical distribution systems and electronic products. The company produces seat systems that are fully assembled and ready for installation in automobiles and light trucks. In all cases, seat systems are designed and engineered for specific vehicle models or platforms.

Lear Corporation (LEA) is not to be confused with Learjet made by Bombardier Inc. (BBD.B).

Lear’s President for Seating in Europe and Africa, Gideon Jewel commented in a company press release: With Lear’s continued growth, we are pleased to locate our new plant in Iasi, known as a major center for the textile industry…We also appreciate the cooperation of all involved as Lear adds a fourth facility in Romania.”

As of the third quarter, Lear is increasing its full-year outlook for sales, earnings and free cash flow with expected sales projected at approximately $16 billion, up from the prior outlook of around $15.8 billion. Core operating earnings are projected at approximately $835 million, up from around $750 to $800 million, and free cash flow is projected at approximately $325 million, up significantly from $25 million in the previous forecast, according to a company press release.

Here’s the company and guru activity update:

Lear Corporation (LEA)

Up 80% over 12 months, Lear Corporation has a market cap of $6.59 billion. The current share price is around $81.66. Shares trade at a P/E of 6.20 and a P/B of 2.30. The dividend yield is 0.84%.

The company reported financial results for the third quarter of 2013 with sales up 11% at $3.9 billion. Lear’s core operating earnings were up by 15% at $207 million, and adjusted earnings of $1.45 per share were up 12%. Lear Corporation had free cash flow of $61 million at the end of third quarter, and reported its 16th consecutive quarter of margin improvement, year-over-year.

Lear Corporation's president and CEO Matt Simoncini commented in a company press release: “I'm pleased with our solid financial results in the third quarter…Our sales are increasing faster than the overall industry, and the investments we have made in the business have improved our competitive position and are driving profitable growth.”

Guru Action: As of the third quarter of 2013, there are 11 gurus holding LEA and recent insider trading.

Jim Simons reduced his position by 56.55%, as of Sept. 30, 2013. He sold 552,400 shares at an average price of $68.83 per share for a gain of 18.6%.

He gained 83% buying 1,262,000 shares at an average price of $44.59 per share. He gained 33% selling 837,500 shares at an average price of $61.61per share. Simons holds current shares of 424,500 or 0.53% of shares outstanding.

The top guru stakeholder Hotchkis & Wiley reduced its position by 7.99%, as of Sept. 30, 2013. Hotchkis & Wiley holds current shares of 1,975,188 or 2.45% of shares outstanding.

David Dreman reduced his position by 97.29%, as of Sept. 30, 2013. He sold 56,468 shares at an average price of $68.83 per share for an 18.6% gain.

Over eight gaining quarters, Dreman gained 93% buying 79,210 shares at an average price of $42.24 per share. He gained 25% selling 77,6361shares at an average price of $65.13 per share.

In the third quarter, Louise Moore Bacon and Jeremy Grantham made new buys of 40,000 and 8,814 shares, respectively.

Ray Dalio sold out LEA after two quarters of gains. In the second quarter of 2013, he bought 5,000 shares at an average price of $57.69 per share for a 41.5% gain. In the third quarter of 2013, he sold 5,000 shares at an average price of $68.83 per share for an 18.6% gain.

Tracking historical share price, revenue and net income:



Here’s more guru and insider trading of LEA.

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About the author:

Sally Jones
Sally Jones writes about Real Time Picks. She says, "I truly enjoy watching the Gurus in realtime and telling their story."

Rating: 2.7/5 (3 votes)

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