Lear's Q2 Earnings Surpass Expectations, Revenues Remain Flat Y/Y

Lear Corp. LEA reported its second quarter 2025 adjusted earnings per share of $3.47, which beat the Zacks Consensus Estimate of $3.23, thanks to better-than-expected revenues and profits from the Seating and E-System segments. The bottom line, however, decreased from $3.60 reported in the year-ago quarter. 

In the reported quarter, revenues remained flat year over year at $6.03 billion and surpassed the Zacks Consensus Estimate of $5.89 billion.

Lear Corporation Price, Consensus and EPS Surprise

Lear Corporation price-consensus-eps-surprise-chart | Lear Corporation Quote

Segmental Performance

Sales of the Seating segment totaled $4.47 billion in the reported quarter, up from $4.45 billion generated in the year-ago quarter and surpassed the Zacks Consensus Estimate of $4.37 billion. Adjusted segment earnings amounted to $298.9 million, down from $302.1 million recorded in the year-ago quarter but beat the Zacks Consensus Estimate of $276 million. The segment recorded adjusted margins of 6.7% of sales, down from 6.8% recorded in the previous year’s quarter.

Sales of the E-Systems segment totaled $1.56 billion, which fell 0.6% year over year but topped the Zacks Consensus Estimate of $1.52 billion. Adjusted segmental earnings amounted to $75.8 million, down from $82.2 million in the corresponding quarter of 2024. The figure, however, surpassed the Zacks Consensus Estimate of $67 million. For the E-Systems segment, the adjusted margin was 4.9% of sales, down from 5.3% in the year-ago quarter.

Performance by Region

Sales in the North America region decreased 1.3% year over year to $2.52 billion in the quarter under review, but surpassed the Zacks Consensus Estimate of $2.44 billion.

Sales in the Europe and Africa region fell 0.39% year over year to $2.16 billion, beating the Zacks Consensus Estimate of $2.13 billion.

Sales in the Asia region totaled $1.14 billion in the quarter, which increased 6.5% year over year and beat the Zacks Consensus Estimate of $1.13 billion.

Sales in the South America region totaled $203.3 million in the quarter, down from $213.9 million generated in the year-ago period and missing the Zacks Consensus Estimate of $235 million.

Financial Position & Other Tidbits

The company had $888 million in cash and cash equivalents as of June 28, 2025, compared with $1.05 billion as of Dec. 31, 2024. Long-term debt was $2.76 billion as of June 28, 2025, up from 2024-end levels.

During the quarter under discussion, net cash used in operating activities totaled $296.2 million. The company posted an FCF of $170.8 million in the quarter.

During the quarter, LEA repurchased 271,117 shares of its common stock for a total of $25 million. At the end of the quarter, Lear had a remaining share repurchase authorization of nearly $1 billion.

LEA Provides 2025 Guidance

Lear projects its full-year net sales in the band of $22.47-$23.07 billion. Core operating earnings are envisioned in the range of $955-$1,095 million.

Operating cash flow is projected between $1.01 billion and $1.11 billion. Lear anticipates FCF in the band of $420-$520 million. Capital spending is now estimated to be $590 million. Adjusted EBITDA is expected to be between $1.57 billion and $1.71 billion.

LEA currently carries a Zacks Rank #3 (Hold).

Other Stocks to Consider

Some better-ranked stocks in the auto space are Ferrari N.V. RACE, PHINIA Inc. PHIN and XPeng Inc. XPEV. While RACE and PHIN sport a Zacks Rank #1 (Strong Buy) at present, XPEV carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here. 

The Zacks Consensus Estimate for RACE’s fiscal 2025 sales and earnings indicates year-over-year growth of 13.6% and 12.1%, respectively. EPS estimates for fiscal 2025 and 2026 have improved 5 cents each in the past 30 days.

The Zacks Consensus Estimate for PHIN’s 2025 sales and earnings implies year-over-year growth of 0.58% and 12.44% respectively. EPS estimates for 2025 and 2026 have improved by 14 cents and 16 cents, respectively, in the past seven days.

The Zacks Consensus Estimate for XPEV’s 2025 sales and earnings indicates year-over-year growth of 102% and 66.7%, respectively. EPS estimates for 2025 have improved 7 cents in the past 90 days. The EPS estimate for 2026 has increased a penny in the past 60 days.

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This article originally published on Zacks Investment Research (zacks.com).

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