Value
8.8/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 8.9 |
| P/S | 10.0 |
| EV/EBITDA | 8.8 |
| Fwd P/E | 9.7 |
| PEG | 10.0 |
| Analyst target | 6.0 |
- ▸Forward P/E: 7.3x
- ▸PEG: 0.06
- ▸Attractively valued
LEA · Why this verdict
Why Lear (LEA) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score6.0/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Lear Corporation's stock has reached and nearly exhausted its calculated price target — leaving the reward-to-risk geometry at 0.23-to-1 — while declining revenue, elevated leverage, and quality metrics sitting exactly at the minimum acceptable floor combine to limit the investment case for new commitment.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue has declined roughly 10% year-over-year alongside a debt-to-equity of 1.6, a combination that compresses financial flexibility and raises the probability that the low valuation multiple reflects structural rather than cyclical headwinds. Bear case | Revenue growth turns positive and exceeds 3% year-over-year for 2 consecutive quarters while debt-to-equity falls below 1.4. | ↑Improving |
| CounterEarnings growth has still managed to outpace revenue trends, suggesting efficiency improvements or favorable mix-shift are partially offsetting top-line pressure — if that margin dynamic holds, the leverage concern may not crystallize. | ||
The company's quality metrics sit exactly at the minimum acceptable floor, with no identified competitive moat and an overall financial profile that leaves little buffer if operating conditions deteriorate further. Quality breakdown | Piotroski F-Score improves above 8 out of 9 and operating margins expand for 2 consecutive quarters, signaling a meaningful quality recovery. | ↓Deteriorating |
| CounterA Piotroski F-Score of 7 out of 9 indicates balance sheet mechanics are healthier than the moat assessment alone implies, suggesting the quality picture is mixed rather than uniformly weak. | ||
With just 1.5% headroom to the price target and a reward-to-risk ratio of 0.23-to-1, the current geometry places far more expected loss than gain — removing the margin of safety that new commitment requires. Warnings | Consensus analyst price targets are revised upward to more than 10% above the current price of $144.44 — specifically above $159 — restoring a geometry that supports reentry. | ↑Improving |
| CounterThe company has beaten estimates in 3 of the last 4 quarters, with the two most recent quarters delivering beats of 10% and 22%; sustained outperformance could prompt upward target revisions that restore upside geometry without a price pullback. | ||
With the momentum score at the floor of the minimum gate threshold, on-balance volume declining, and the price action range-bound with no clear catalyst, the weight of technical evidence leans toward distribution rather than accumulation. Momentum breakdown | RSI rises above 60 from the current level of 53 and on-balance volume turns positive for more than 30 consecutive days. | ↑Improving |
| CounterRSI near 53 is technically neutral — neither overbought nor oversold — and the stock's position above the 200-day moving average means the trend has not broken down; a modest positive catalyst could shift the balance quickly. | ||
Revenue has declined roughly 10% year-over-year alongside a debt-to-equity of 1.6, a combination that compresses financial flexibility and raises the probability that the low valuation multiple reflects structural rather than cyclical headwinds.
↑ImprovingBear case
- Expectation
- Revenue growth turns positive and exceeds 3% year-over-year for 2 consecutive quarters while debt-to-equity falls below 1.4.
CounterEarnings growth has still managed to outpace revenue trends, suggesting efficiency improvements or favorable mix-shift are partially offsetting top-line pressure — if that margin dynamic holds, the leverage concern may not crystallize.
The company's quality metrics sit exactly at the minimum acceptable floor, with no identified competitive moat and an overall financial profile that leaves little buffer if operating conditions deteriorate further.
↓DeterioratingQuality breakdown
- Expectation
- Piotroski F-Score improves above 8 out of 9 and operating margins expand for 2 consecutive quarters, signaling a meaningful quality recovery.
CounterA Piotroski F-Score of 7 out of 9 indicates balance sheet mechanics are healthier than the moat assessment alone implies, suggesting the quality picture is mixed rather than uniformly weak.
With just 1.5% headroom to the price target and a reward-to-risk ratio of 0.23-to-1, the current geometry places far more expected loss than gain — removing the margin of safety that new commitment requires.
↑ImprovingWarnings
- Expectation
- Consensus analyst price targets are revised upward to more than 10% above the current price of $144.44 — specifically above $159 — restoring a geometry that supports reentry.
CounterThe company has beaten estimates in 3 of the last 4 quarters, with the two most recent quarters delivering beats of 10% and 22%; sustained outperformance could prompt upward target revisions that restore upside geometry without a price pullback.
With the momentum score at the floor of the minimum gate threshold, on-balance volume declining, and the price action range-bound with no clear catalyst, the weight of technical evidence leans toward distribution rather than accumulation.
↑ImprovingMomentum breakdown
- Expectation
- RSI rises above 60 from the current level of 53 and on-balance volume turns positive for more than 30 consecutive days.
CounterRSI near 53 is technically neutral — neither overbought nor oversold — and the stock's position above the 200-day moving average means the trend has not broken down; a modest positive catalyst could shift the balance quickly.
Per-dimension breakdown
Quality
4.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 4.2 |
| ROA | 3.0 |
| Gross margin | 0.0 |
| Op margin | 1.3 |
| Net margin | 1.2 |
| Current ratio | 4.5 |
| FCF quality | 9.3 |
| Moat | 5.0 |
| Piotroski F | 7.8 |
- ▸Excellent cash conversion: 128% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
Growth
6.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 2.9 |
| EPS growth | 9.1 |
Momentum
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 2.2 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA but MA still rising (+0.5%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 3.3 |
| Analyst rating | 7.2 |
| Price target | 8.0 |
- ▸LLM news sentiment: -0.34 (n=5)
- ▸Analyst upside: 23%
Insider
5.2/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.3 |
- ▸Negligible insider selling — $199,742 (0.003% of mkt cap)
Peer rank
5.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.7 |
| quality rank | 5.3 |
| growth rank | 3.3 |
- ▸Attractive P/E vs peers
Technical
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 5.6 |
| support resistance | 5.4 |
| 52w position | 5.9 |
Risk (lower is worse)
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.5 |
| days to cover | 5.8 |
| volatility | 5.5 |
| put call | 8.9 |
| implied vol | 4.6 |
| max pain risk | 7.0 |
| beta | 5.9 |
| debt equity | 6.9 |
| news risk | 4.0 |
- ▸Concentration risks: 2 MED (10-K Item 1A)
Catalyst
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 8.9 |
| dividend safety | 8.5 |
| news activity | 8.0 |
- ▸Perfect beat streak: 4Q
- ▸Dividend aristocrat: 2.5% yield
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:5.3>=4.5
- INSIDER:OK
- 8K:CLEAN
- EARNINGS_PROXIMITY:92d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:1.3<1.5@spot
Warning (2)
- MOMENTUM:5.3<5.5 (soft — BUY_NOW allowed but watch)
- ANALYST_DOWNGRADE:SOFT(2)
Reward-to-Risk
1.32
Upside
+7.4%
Downside
5.6%
Sizing output
AVOID
SetupRange Bound — RSI 47 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 4.0 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Value at 8.8) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:1.3<1.5@spot) reinforce the read. Current asymmetry R:R is 1.32 — supplementary context, not the trigger for this path.
The strongest dimensions are Value at 8.8, Catalyst at 7.6, and Sentiment at 6.2; the weakest are Quality at 4.0, Insider at 5.2, and Momentum at 5.3. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of 1.32 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Price At Target Negative Geometry
Trip ifConsensus analyst price target is revised above $159 — more than 10% above the current price of $144.44 — within 2 quarters.
- P2Revenue Decline High Leverage
Trip ifRevenue growth turns positive and exceeds 3% year-over-year for 2 consecutive quarters.
- P3Quality At Minimum Threshold
Trip ifPiotroski F-Score rises above 8 out of 9 for 2 consecutive quarters.
- P4Momentum At Gate Floor
Trip ifRSI rises above 60 from the current level of 53 and on-balance volume turns positive for more than 30 consecutive days.