How Is Lear Corporation Likely To Grow In The Next 2 Years?

&l;a href=&q;http://finapps.forbes.com/finapps/jsp/finance/compinfo/CIAtAGlance.jsp?tkr=lea&a;amp;tab=searchtabquotesdark&q; target=&q;_blank&q;&g;Lear Corporation&l;/a&g;, (NYSE: LEA), a leading supplier of automotive seating and electrical systems globally, has had a strong start to 2018. Lear&a;rsquo;s stock price has gained close to 16% since the beginning of the year and we expect the company to gain further momentum given its strong presence in the seating segment and the global shift towards &l;span class=&q;ql-size-large&q;&g;energy efficient and connected vehicles. We expect Lear&a;rsquo;s top line to grow at a CAGR of 8% over the next two years.&l;/span&g;

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&l;a href=&q;http://dashboards.trefis.com/no-login-required/EciblOmu?fromforbesandarticle=how-is-lear-corporation-likely-to-grow-in-the-next-2-years&q; target=&q;_blank&q;&g;&l;img class=&q; wp-image-185174 size-full&q; src=&q;http://blogs-images.forbes.com/greatspeculations/files/2018/06/lea13.jpg?width=960&q; alt=&q;&q; data-height=&q;346&q; data-width=&q;728&q;&g;&l;/a&g;

&l;span class=&q;ql-size-large&q;&g;Lear backed the &l;a href=&q;http://files.shareholder.com/downloads/LEA/6007557890x0xS842162-18-7/842162/filing.pdf&q; target=&q;_blank&q;&g;second position&l;/a&g; (based on revenue) in the seat systems assembly market globally in 2017 which was estimated at &l;a href=&q;http://files.shareholder.com/downloads/LEA/6007557890x0xS842162-18-7/842162/filing.pdf&q; target=&q;_blank&q;&g;$65 billion&l;/a&g; by the company. The company&a;rsquo;s &l;a href=&q;http://www.lear.com/Press-Room/4422/lear-completes-acquisition-of-grupo-antolins-automotive-seating-business.aspx&q; target=&q;_blank&q;&g;recent acquisition&l;/a&g; of Grupo Antolin&a;rsquo;s automotive seating business is expected to further boost the company&a;rsquo;s growth prospects in the seating segment in the upcoming years as Antolin posses a strong market presence in Europe. Lear&a;rsquo;s 2018 first quarter seating sales increased by 12% year-on-year (y-o-y) and the company attributed a large proportion of this growth to its recent acquisition. Additionally, a shift in consumer preference towards sports utility vehicles (SUVs) and crossovers are expected to further aid Lear&a;rsquo;s top line as bigger cars such as SUVs and crossovers command premium content per vehicle (premium/ additional seating and more advanced electric content) leading to higher revenue for Lear. Lear&a;rsquo;s content per SUV is &l;a href=&q;https://www.forbes.com/sites/greatspeculations/2017/01/20/lears-seating-division-is-primed-to-grow-through-decade-end/#7a0304ed3e7a&q;&g;estimated&l;/a&g; at $1,000 as against the $700 average content per vehicle. &l;/span&g;

Furthermore, Lear&a;rsquo;s E-Systems segment is also expected to experience a substantial growth rate over the next two years driven by a changing global &l;span class=&q;ql-size-large&q;&g;trend towards energy efficient and autonomous vehicles. &l;/span&g; The company expects the electrical content growth rate in vehicles to be higher than the overall industry growth rate by &l;a href=&q;http://www.lear.com/Site/Products/E-Systems/&q; target=&q;_blank&q;&g;almost 5%&l;/a&g;, which would require more complex vehicle electrical architectures to cater to this growth. The company has been gearing up its E-systems operations to accommodate this growth and the company&a;rsquo;s recent announcement to &l;a href=&q;https://www.reuters.com/article/brief-lear-to-acquire-exo-technologies/brief-lear-to-acquire-exo-technologies-idUSASB0BX9X&q; target=&q;_blank&q;&g;acquire EXO Technologies&l;/a&g; coupled with the additional advanced technology obtained through its &l;span class=&q;ql-size-large&q;&g;Grupo&l;/span&g; Antolin&a;rsquo;s acquisition will enable Lear to remain at the top of its game.

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Lear in 2018 expects 145 new launches in its seating segment and 160 launches in its E-system segment which would favorably enhance the company&a;rsquo;s results. China is expected to remain a major growth driver for both of the company&a;rsquo;s segments with an expected sales growth rate of 10% y-o-y in 2018. Our estimates for Lear&a;rsquo;s two years&a;rsquo; projected growth are elaborated in our &l;a href=&q;http://dashboards.trefis.com/no-login-required/EciblOmu?fromforbesandarticle=how-is-lear-corporation-likely-to-grow-in-the-next-2-years&q; target=&q;_blank&q;&g;&l;strong&g;interactive dashboard&l;/strong&g;&l;/a&g;. You can make changes to our assumptions to arrive at your own revenue estimate for the company.

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