Automotive Stock Inches Lower on Earnings, Revenue Miss

The equity still sports a 47.8% year-over-year lead, though

facebook twitter linkedin

The shares of Lear Corporation (NYSE:LEA) are down 1.9% at $165.59 at last check, after the automotive name reported second-quarter earnings of $2.45 per share -- just 2 cents shy of analysts' estimates -- as well a revenue miss. The company also slashed its full-year forecast, highlighting the lasting impact of the semiconductor shortage.

The security has been chopping lower on the charts since its June 4, three-year high of $204.91. Overhead pressure from the 40-day moving average has been keeping a tight lid on the shares, rejecting a rally to the $178 level earlier this month. Nonetheless, the equity remains up 47.8% year-over-year.

The brokerage bunch is still relatively split towards Lear stock. Of the 13 analysts in question, seven call it a "buy" or better, while the remaining six say "hold." Meanwhile, the 12-month consensus target price of $206.60 is a healthy 23.4% premium to current levels.

The options pits are firmly in the bullish camp, however, with calls popular. This is per LEA's 10-day call/put volume ratio of 6.50 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 89% of readings from the past year. This means calls are being picked up at a faster-than-usual pace.

From a fundamental point of view, Lear stock has faced a steady decrease in revenue and net income over the past few years. On the top-line, it has seen back-to-back years of revenue declines in 2019 and 2020, while its net income has consistently decreased, too, down 78% since 2017. Plus, the equity is now trading at an extremely high price-earnings ratio of 35.25. Overall, Lear stock is a high-risk investment, but its forward price-earnings ratio of 12.06 makes it a potentially intriguing turnaround play.


Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 



Special Offers from Schaeffer's Trading Partners