Strength Seen in Lear (LEA): Can Its 3.2% Jump Turn into More Strength?

Lear (LEA) shares soared 3.2% in the last trading session to close at $106. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 13.6% gain over the past four weeks.

Lear shares surged, driven by new program wins and strong partnerships with Chinese domestic automakers. In April, the company took control of a China joint venture that supplies seats for two major BYD programs, expected to add around $70 million to its 2025 revenues.

This automotive seating and electrical distribution systems company is expected to post quarterly earnings of $3.03 per share in its upcoming report, which represents a year-over-year change of -15.8%. Revenues are expected to be $5.62 billion, down 6.6% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Lear, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on LEA going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Lear is a member of the Zacks Automotive - Original Equipment industry. One other stock in the same industry, Westport Innovations (WPRT), finished the last trading session 1.3% higher at $3.22. WPRT has returned 10.6% over the past month.

For Westport, the consensus EPS estimate for the upcoming report has remained unchanged over the past month at -$0.29. This represents a change of +32.6% from what the company reported a year ago. Westport currently has a Zacks Rank of #2 (Buy).

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

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