Lear Corporation (LEA) receives a weak valuation score of 15 from InvestorsObserver's analysis. Our proprietary scoring system considers the overall health of the company by looking at the stock's price, earnings, and growth rate to determine if it represents a good value. LEA holds a better value than 15% of stocks at its current price. Investors who are focused on long-term growth through buy-and-hold investing will find the Valuation Rank especially relevant when allocating their assets.
Metrics Analysis
LEA has a trailing twelve month Price to Earnings (PE) ratio of 44.2. The historical average of roughly 15 shows a poor value for LEA stock as investors are paying higher share prices relative to the company's earnings. LEA's high trailing PE ratio shows that the firm has been trading above its fair market value recently. Its trailing 12-month earnings per share (EPS) of 2.47 does not justify the stock's current price. However, trailing PE ratios do not factor in the company's projected growth rate, resulting in many newer firms having high PE ratios due to high growth potential enticing investors despite inadequate earnings.
LEA currently has a 12-month-forward-PE-to-Growth (PEG) ratio of 6.06. The market is currently overvaluing LEA in relation to its projected growth due to the PEG ratio being above the fair market value of 1. LEA's PEG comes from its forward price to earnings ratio being divided by its growth rate. Due to the inclusion of more fundamentals of a company's overall health and a focus on the future rather than the past, PEG ratios are one of the most used valuation metrics by analysts today.
Summary
All together these valuation metrics paint a pretty poor picture for LEA at its current price due to a overvalued PEG ratio due to strong growth. The PE and PEG for LEA are worse than the average of the market resulting in a valuation score of 15.
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