LEA, Lear Corp
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Read top to bottom, the owner's questions in the order an owner asks them: what the business is, whether the record holds, whether it survives and is any good, and what you would be paying. New to the questions? Start with the Method.
The business in brief
read the 10-K →What this business is and what moves its needle, read from the numbers in its filings. The quantitative detail is in the sections below; the verdict is left to you.
- What it is
- Revenue is Seating (74%) and E-Systems (26%).
- What moves the needle
- How hard the assets work, and what the inputs cost. What decides it: utilization, how much of the capex merely keeps the assets running, and what a downturn does to a heavy fixed-cost base.
- Is it a good business?
- Return on capital has sat near the cost of capital (median 11%). Owner earnings, the cash-based check, have been thin too. This is price-taker territory, where the balance sheet and the cycle matter more than any multiple; the 10-K is where you look.
Every line here is arithmetic from the company's own filings, not a model's opinion, and each figure appears in full in the sections below.
Where the money comes from
read the 10-K →Seating is 74% of revenue, so this is largely a single-segment business.
- Seating74%$17.3B
- E-Systems26%$6.0B
From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.
The record, 2016–2025
realized figures from each filing, no estimates| 2016’16 | 2017’17 | 2018’18 | 2019’19 | 2020’20 | 2021’21 | 2022’22 | 2023’23 | 2024’24 | 2025’25 | TTMTTMApr 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| RevenueRevenue | $18.6B | $20.5B | $21.1B | $19.8B | $17.0B | $19.3B | $20.9B | $23.5B | $23.3B | $23.3B | $23.5B |
| Operating marginOp. mgn | 7.9% | 7.9% | 7.8% | 5.4% | 2.7% | 3.5% | 3.1% | 4.0% | 3.8% | 3.3% | 3.6% |
| Net incomeNet inc. | $975M | $1.3B | $1.1B | $754M | $159M | $374M | $328M | $573M | $507M | $437M | $528M |
| EPS (diluted)EPS | $13.33 | $18.96 | $17.38 | $12.17 | $2.62 | $6.19 | $5.47 | $9.68 | $8.97 | $8.15 | $10.25 |
| Owner earningsOwner earn. | $1.1B | $1.2B | $1.1B | $680M | $211M | $85M | $383M | $623M | $561M | $527M | $732M |
| ROICROIC | 28% | 30% | 28% | 17% | 5% | 8% | 8% | 11% | 11% | 9% | 10% |
| CapexCapex | $528M | $595M | $677M | $604M | $452M | $585M | $638M | $627M | $559M | $562M | $582M |
| Capex / revenueCapex/rev | 2.8% | 2.9% | 3.2% | 3.0% | 2.7% | 3.0% | 3.1% | 2.7% | 2.4% | 2.4% | 2.5% |
| Capex vs depreciationCapex/dep | 1.40× | 1.39× | 1.40× | 1.18× | 0.84× | 1.02× | 1.11× | 1.04× | 0.90× | 0.93× | 0.96× |
| Total debtDebt | $1.9B | $2.0B | $2.0B | $2.3B | $2.3B | $2.6B | $2.6B | $2.7B | $2.7B | $2.7B | $2.7B |
| Cash & investmentsCash+inv | $1.3B | $1.5B | $1.5B | $1.5B | $1.4B | $1.4B | $1.2B | $1.2B | $1.1B | $1.0B | $939M |
| Net debt / (cash)Net debt | $672M | $429M | $427M | $761M | $949M | $1.2B | $1.4B | $1.5B | $1.7B | $1.7B | $1.8B |
Owner’s Scorecard
Will it survive?
- ComfortableOperating income $777M ÷ interest expense $101M
Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.
- ModerateTotal debt $2.7B ÷ operating income $777M
Years of operating profit it would take to repay all debt. A first read, not a credit rating: it's gross debt (not netted against cash) over EBIT (not EBITDA), and a cyclical year distorts it.
- Debt, net of cash $1.7BMeaningful net debtCash $1.0B + ST investments $4M − debt $2.7B
Netting $1.0B of cash and short-term investments against $2.7B of debt leaves $1.7B owed, about 2.2× a year's operating profit, versus the gross figure above. It also holds $54M in longer-dated marketable securities; counting those, it sits at $1.6B of net debt. Net debt is the leverage figure that matters; the gross ratio above ignores the cash already set against it. Strategic or illiquid investments aren't counted here.
- TightDSO 61 + DIO 28 − DPO 57 days
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.
Is it a good business?
- SolidNOPAT $579M ÷ invested capital $6.7B (debt + equity − cash)
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; below ~8% the company may destroy value as it grows. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
- ThinOwner Earnings $527M = operating cash $1.1B − capex $562M
What an owner could take out without starving the business. That's 2% of revenue. Treating stock comp as the real expense it is (less $66M of SBC) leaves $461M. Honest caveat: capex here blends maintenance and growth, so steady-state Owner Earnings may run higher (see capex vs. depreciation).
- Cash-backedCash from ops $1.1B ÷ net income $437M
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.
How is the cash used?
- Returns most of itDividends + buybacks $490M ÷ Owner Earnings $527M
Of $527M Owner Earnings, $490M (93%) went back to shareholders, $165M dividends, $325M buybacks. Net of $66M stock comp, the real buyback was about $259M. Returning most of it signals a mature cash machine; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
- Investing or harvesting? 0.93×MaintainingCapex $562M ÷ depreciation $604M
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.
Durability & moat, 2016–2025
A moat is a high return that doesn’t fade, reinvested at high returns. Here is what the record says, judgments, not another chart of the numbers.
- Profitable years 10 of 10
Never lost money over the record, the earnings stability Graham insisted on.
- Return on capital ≥ 15% 4 of 10 yrs
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
- Operating margin 8% (FY2016) → 3% (FY2025)
Margins slipped over the record, competition or costs are biting in.
- Reinvestment, incremental ROIC −29%
Reinvested capital earned a negative return, the business spent money to shrink its own economics.
- Owner earnings growth −8%/yr
Free cash to owners shrank about 8% a year over the record.
- Worst year 2020 · 2.7% op. margin
Stayed profitable even in its hardest year, the resilience that survives recessions.
- Share count −3.4%/yr
The share count is shrinking, buybacks are quietly growing your slice of the business.
- Dividend record rising
Paid and raised the dividend across the record, the continuity Graham prized.
Solvent is not the same as cheap; growing is not the same as good. These are vital signs, not a verdict, the judgment is yours, and the filing is one click away.
How the cash was used, 2016–2025
Over the record, the business generated $12.3B of operating cash, and how management split it is, as Buffett insists, the job that matters most. Here it reads as a balanced allocator, splitting cash between the business, owners, and the balance sheet.
- Reinvested$5.8B · 47%
- Dividends$1.5B · 12%
- Buybacks$3.5B · 29%
- Retained (debt / cash)$1.5B · 12%
It reinvested $5.8B (47%) back into the business and returned $5.0B (41%) to owners, $1.5B in dividends, $3.5B in buybacks. Total debt rose $772M across the span.
Buybacks are gross of stock issued to employees; net of that, the real return to owners is lower (see Management & pay). And the mix alone doesn't grade management, what matters is the return earned on the dollars reinvested (see incremental ROIC in the durability report).
Management & pay
Two questions Buffett actually asks about pay: is stock compensation, a real expense, whatever the income statement pretends, quietly large, and is the top wildly out of line with the floor. He's no populist about it; he just wants pay that's rational and earned, and comp committees that aren't lapdogs.
- Stock-based compensation$66M
The slice of the business handed to employees in shares this year, 0% of revenue, equal to 9% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. And note the trap, the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.
Graham’s defensive-investor test
3 of 6 metGraham gave the defensive investor seven numerical criteria in The Intelligent Investor. Here they are, run mechanically on the filings, his framework, not our verdict. Meeting them is a floor of safety, not a reason to buy; missing one is no veto, since many fine modern businesses fail his strictest liquidity tests by design. The worth is in seeing exactly where a company stands against the canon, every number sourced.
- Adequate size PassRevenue ≥ $2B · $23.3B
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
- Strong liquidity MissCurrent ratio ≥ 2× · 1.35×
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
- Conservative debt NearDebt ≤ working capital · $2.7B vs $2.0B WC
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
- Earnings stability PassA profit every year (10-yr record) · no losses
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
- Dividend record PassUninterrupted dividends · paid every year (10)
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
- Earnings growth MissEarnings +33% over the record · −56%
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
- Moderate price —P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Earnings are $8.15/share and book value $93.95/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.
Graham would be the first to say a checklist is a starting point, not an answer. These are his defensive, bargain-hunter's tests, the cigar-butt lens. Buffett and Munger grew past it, paying fair prices for wonderful businesses; that lens lives in the moat and owner-earnings work above, and both still matter. Clearing Graham’s tests earns a closer look; failing them earns harder questions, not a dismissal.
What the price implies
reverse-DCFA price is the one input we don't pull, you bring it. Type today's close (read it off any broker or quote site) and see the owner-earnings growth you'd have to believe to justify it, set beside what Lear Corp has actually delivered. Nothing is stored; the number stays in your browser.
Enter a price above to run it.
Graham capped the multiple at 15×; Buffett and Munger let that rule go, a wonderful business can deserve 50× if the thesis holds. Read it as the bargain-hunter's floor, not a ceiling on good sense.
The discount rate is your interest rate, what a dollar years from now is worth today, anchored to the long-term Treasury yield (~4–5% today, plus whatever premium you want for risk). Drag it toward the risk-free rate and watch how much growth the price suddenly “needs”: interest rates are gravity on valuations.
Owner earnings $732M on 52M diluted shares; net debt $1.8B. This is a lens, not a price target, it says what you'd have to believe, not what the company is worth, and it runs on one year of (noisy) owner earnings at assumptions you can see and change.
What the filing emphasizes, FY2025
read the 10-K →Each year a 10-K must name what could go wrong, in the company's own words. Here are the ones Graham and Buffett would stop on, each set against the figure from the same filings that bears on it, anchored to a period you can find in the record above. We point; the judgment is yours.
- Customer concentrationBusiness
Who the revenue leans on. When one buyer is a large slice of sales, that buyer holds the pricing power, and its troubles become the company's.
“In 2025, General Motors, one of the largest automotive and light truck manufacturers in the world, accounted for 22% of our net sales.”
From the recordRevenue exposed (TTM)$23.5B - Pricing power & competitionRisk Factors
Whether the company sets its price or takes it. Durable pricing power is the surest mark of a moat; price competition is the surest mark there isn't one.
“Downward pricing pressure by automotive manufacturers is a characteristic of the automotive industry.”
From the recordOperating margin3.6% now (TTM), off a 7.9% peak (FY2016) - Supplier & input dependenceRisk Factors
A choke point upstream. A sole or limited supplier can dictate terms, and a single shortage can stop the line.
“We are responsible for managing our supply chain, including suppliers that may be the sole sources of products that we require, that our customers direct us to use or that have unique capabilities that would make it difficult and/or expensive to re-source.”
From the recordGross-margin cushion (TTM)7% - Debt terms & refinancingMD&A
The fine print behind the debt. Covenants and near-term maturities decide who is really in control when a year goes badly.
“Covenants Subject to certain exceptions, the indentures governing the Notes contain restrictive covenants that, among other things, limit the ability of the Company to: (i) create or permit certain liens and (ii) consolidate, merge or sell all or substantially all of the Company's assets.”
From the recordBalance sheet (TTM)$1.7B meaningful net debt · interest covered 7.7× - Litigation & contingenciesMD&A
Claims an owner inherits. Most disclosure is boilerplate; this fires only on an actual matter, a named suit, a settlement, a contingency, a number.
“As of December 31, 2025, we had recorded reserves for pending legal disputes, including commercial and contractual disputes, product liability claims and other legal matters, of $14 million.”
A judgment, not a number, weigh it against the filing yourself. - Cyclicality & demandRisk Factors
How the business behaves when the economy turns. A cyclical earns its keep across the whole cycle, not at the peak.
“The automotive industry is cyclical and sensitive to general economic conditions, including interest rates, inflation, consumer demand and spending levels, and geopolitical issues.”
From the recordWorst year on record2.7% operating margin (FY2020) - Regulation & policyBusiness
Rules that can rewrite the economics, tariffs, antitrust, data, export controls.
“Trump has announced various tariffs that impact industries around the world, including the automotive industry.”
A judgment, not a number, weigh it against the filing yourself.
What changed, FY2025 vs FY2024
read the 10-K →Most of a 10-K is boilerplate carried over verbatim; the signal is in what's new. These lines appear this year and weren't there last, figure updates filtered out, so only the language shift remains.
- “In connection with this transaction, the Company recognized a loss on the extinguishment of debt of $ 0.3 million, which is included in other expense, net in the accompanying consolidated statement of income for year ended December 31, 2025, and incurred related issuance costs of $ 3.2 million, whic…”
- “For further information related to these impairment charges, see Note 2, "Summary of Significant Accounting Policies — Impairment of Long-Lived Assets," and Note 6, "Leases." Goodwill In 2025 and 2024, the Company completed quantitative goodwill impairment analyses for two reporting units (Note 2, "…”
- “Although U.S. tariffs did not have a material impact on our operating performance in 2025, the policies relating to these tariffs continue to evolve, including with respect to the type of tariff or export control, the tariff rates, the countries, components and materials to which such tariffs apply,…”
- “Further, the U.S. and other governments could impose additional sanctions, export controls or other trade restrictions that could restrict us from doing business directly or indirectly in or with certain countries or parties, which could include affiliates (e.g., China has imposed tariffs and taken …”
- “To date, our mitigation efforts have been successful, but we cannot provide any assurance that future government actions will not adversely impact our customers' production or undermine our mitigation efforts, which could in turn adversely impact our business, financial condition and results of oper…”
Classic text analysis over the filing itself, no model wrote a word of this, and every quote is the company's own.
Peers, Autos & parts
The same industry, side by side on owner economics, compare, don't rank by a single number.● marks best in the group.
| Company | Revenue | Gross margin | Op. margin | ROIC | Owner earn. margin |
|---|---|---|---|---|---|
| FFord Motor Co | $187.3B | 7% | -4.9% | -55% | 7% |
| GMGeneral Motors Company | $168.0B | 40% | 1.7% | 2% | 10% |
| TSLATesla, Inc. | $94.8B | 18% | 4.6% | 4% | 7% |
| PCARPaccar Inc | $28.4B | 20% | 10.6% | 15% | 13% |
| LEALear Corp | $23.3B | 6% | 3.3% | 9% | 2% |
| APTVAptiv PLC | $20.4B | 19% | 5.8% | 4% | 7% |
| BWABorgwarner Inc | $14.3B | 19% | 3.7% | 4% | 8% |
| RIVNRivian Automotive, Inc. / DE | $5.4B | 3% | -66.5% | -52% | -46% |