Lear Corporation (NYSE:LEA) Technicals Update: A Look Under the Hood

Lear Corporation (NYSE:LEA) currently has a Value Composite score of 19.  The Value Composite One (VC1) is a method that investors use to determine a company’s value. A company with a value of 0 is thought to be an undervalued company, while a company with a value of 100 is considered an overvalued company.  The VC1 is calculated using the price to book value, price to sales, EBITDA to EV, price to cash flow, and price to earnings.  Similarly, the Value Composite Two (VC2) is calculated with the same ratios, but adds the Shareholder Yield.  The Value Composite Two of Lear Corporation (NYSE:LEA) is 13.

When examining stocks, investors might be doing top down research. Top down analysis begins with looking at certain macro-economic factors. This may involve focusing in on the bigger picture and going all the way down to specific stocks. Starting at the top, investors may check on the global economic environment, overall market trends, and sector trends. Investors may choose to start doing research the other way around. This may involve first looking at the fundamentals for particular stocks in order to gauge the strength from a company standpoint. Many investors will scope out all the different investing aspects as to not leave any information uncovered.

Ever wonder how investors predict positive share price momentum?  The Cross SMA 50/200, also known as the “Golden Cross” is the fifty day moving average divided by the two hundred day moving average.  The SMA 50/200 for Lear Corporation (NYSE:LEA) is currently 0.78425.  If the Golden Cross is greater than 1, then the 50 day moving average is above the 200 day moving average – indicating a positive share price momentum.  If the Golden Cross is less than 1, then the 50 day moving average is below the 200 day moving average, indicating that the price might drop.

The Return on Invested Capital (aka ROIC) for Lear Corporation (NYSE:LEA) is 0.302160.  The Return on Invested Capital is a ratio that determines whether a company is profitable or not.  It tells investors how well a company is turning their capital into profits.  The ROIC is calculated by dividing the net operating profit (or EBIT) by the employed capital.  The employed capital is calculated by subrating current liabilities from total assets.  Similarly, the Return on Invested Capital Quality ratio is a tool in evaluating the quality of a company’s ROIC over the course of five years.  The ROIC Quality of Lear Corporation (NYSE:LEA) is 10.896330.  This is calculated by dividing the five year average ROIC by the Standard Deviation of the 5 year ROIC.  The ROIC 5 year average is calculated using the five year average EBIT, five year average (net working capital and net fixed assets).  The ROIC 5 year average of Lear Corporation (NYSE:LEA) is 0.266326.

Investors may be trying to figure out what stocks will give a boost to portfolio performance over the next few months. Value investors may be looking for current value in the market. They are generally looking for bargains and interested in uncovering those stocks that may be primed for a run but have fallen out of favor with Wall Street. Growth investors may be looking to target companies that are able to advance earnings faster than average. This may include searching for those industries that have strong growth trends and a proven track record of strong sales and earnings growth. 

In taking a look at some other notable technicals, Lear Corporation (NYSE:LEA)’s ROIC is 0.302160. The ROIC 5 year average is 0.266326 and the ROIC Quality ratio is 10.896330. ROIC is a profitability ratio that measures the return that an investment generates for those providing capital. ROIC helps show how efficient a firm is at turning capital into profits.

Shareholder Yield
We also note that Lear Corporation (NYSE:LEA) has a Shareholder Yield of 0.057042 and a Shareholder Yield (Mebane Faber) of 0.07050. The first value is calculated by adding the dividend yield to the percentage of repurchased shares.

The second value adds in the net debt repaid yield to the calculation. Shareholder yield has the ability to show how much money the firm is giving back to shareholders via a few different avenues. Companies may issue new shares and buy back their own shares. This may occur at the same time. Investors may also use shareholder yield to gauge a baseline rate of return.

Lear Corporation (NYSE:LEA) has a current MF Rank of 918. Developed by hedge fund manager Joel Greenblatt, the intention of the formula is to spot high quality companies that are trading at an attractive price. The formula uses ROIC and earnings yield ratios to find quality, undervalued stocks. In general, companies with the lowest combined rank may be the higher quality picks.

We can now take aquick look at some historical stock price index data. Lear Corporation (NYSE:LEA) presently has a 10 month price index of 0.72909. The price index is calculated by dividing the current share price by the share price ten months ago. A ratio over one indicates an increase in share price over the period.

A ratio lower than one shows that the price has decreased over that time period. Looking at some alternate time periods, the 12 month price index is 0.79712, the 24 month is 1.09574, and the 36 month is 1.14042. Narrowing in a bit closer, the 5 month price index is 0.71216, the 3 month is 0.82061, and the 1 month is currently 1.03109.

QI Value

Shifting gears, we can see that Lear Corporation (NYSE:LEA) has a Q.i. Value of 20.00000. The Q.i. Value ranks companies using four ratios. These ratios consist of EBITDA Yield, FCF Yield, Liquidity, and Earnings Yield. The purpose of the Q.i. Value is to help identify companies that are the most undervalued. Typically, the lower the value, the more undervalued the company tends to be.

Gross Margin score

Investors may be interested in viewing the Gross Margin score on shares of Lear Corporation (NYSE:LEA). The name currently has a score of 18.00000. This score is derived from the Gross Margin (Marx) stability and growth over the previous eight years. The Gross Margin score lands on a scale from 1 to 100 where a score of 1 would be considered positive, and a score of 100 would be seen as negative.

Some investors may be looking to trade the trend and capitalize on strong current performers. Other investors may look to take a contrarian approach. This can involve looking for names that have been overlooked by the crowd. There are many different contrarian approaches that investors may choose to use. Going against the crowd may require a lot more homework and confidence. There may be hidden gems out there, but is may be wise to investigate why nobody else seems to want to get into the name. Finding that perfect strategy may take a lot of study and dedication. Taking shortcuts in the market can have severe negative effects on the long-term health of the portfolio.

FCF Yield

The FCF Yield 5yr Average is calculated by taking the five year average free cash flow of a company, and dividing it by the current enterprise value. Enterprise Value is calculated by taking the market capitalization plus debt, minority interest and preferred shares, minus total cash and cash equivalents. The average FCF of a company is determined by looking at the cash generated by operations of the company. The Free Cash Flow Yield 5 Year Average of Lear Corporation (NYSE:LEA) is 0.071685.

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