Contrasting Lear Corporation (LEA) & Autoliv (ALV)
Lear Corporation (NYSE: LEA) and Autoliv (NYSE:ALV) are both mid-cap auto/tires/trucks companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, dividends, earnings and profitability.
This table compares Lear Corporation and Autoliv’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Insider & Institutional Ownership
94.3% of Lear Corporation shares are held by institutional investors. Comparatively, 34.8% of Autoliv shares are held by institutional investors. 0.5% of Lear Corporation shares are held by insiders. Comparatively, 0.3% of Autoliv shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Earnings & Valuation
This table compares Lear Corporation and Autoliv’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Lear Corporation||$19.29 billion||0.51||$1.97 billion||$15.06||9.58|
|Autoliv||$10.22 billion||0.91||$1.28 billion||$6.32||16.86|
Lear Corporation has higher revenue and earnings than Autoliv. Lear Corporation is trading at a lower price-to-earnings ratio than Autoliv, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of recent ratings for Lear Corporation and Autoliv, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Lear Corporation currently has a consensus price target of $147.60, suggesting a potential upside of 2.28%. Autoliv has a consensus price target of $104.22, suggesting a potential downside of 2.22%. Given Lear Corporation’s higher possible upside, analysts plainly believe Lear Corporation is more favorable than Autoliv.
Lear Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 1.4%. Autoliv pays an annual dividend of $2.40 per share and has a dividend yield of 2.3%. Lear Corporation pays out 13.3% of its earnings in the form of a dividend. Autoliv pays out 38.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Lear Corporation has increased its dividend for 6 consecutive years and Autoliv has increased its dividend for 7 consecutive years. Autoliv is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility & Risk
Lear Corporation has a beta of 1.32, meaning that its share price is 32% more volatile than the S&P 500. Comparatively, Autoliv has a beta of 1.13, meaning that its share price is 13% more volatile than the S&P 500.
Lear Corporation beats Autoliv on 11 of the 17 factors compared between the two stocks.
About Lear Corporation
Lear Corporation (Lear) is a supplier to the global automotive industry. The Company is engaged in supplying seating, electrical distribution systems and electronic modules, as well as related sub-systems, components and software, to automotive manufacturers. The Company’s segments include Seating and E-Systems. The Company serves the automotive and light truck market. The Seating segment consists of the design, development, engineering, just-in-time assembly and delivery of complete seat systems, as well as the design, development, engineering and manufacture of all seat components, including seat covers and surface materials, such as leather and fabric, seat structures and mechanisms, seat foam and headrests. The E-Systems segment consists of the design, development, engineering, manufacture, assembly and supply of electrical distribution systems, electronic modules and related components and software for light vehicles across the world.
Autoliv, Inc. is a supplier of automotive safety systems with a range of product offerings, including passive safety systems and active safety systems. The Company operates through two segments: Passive Safety and Electronics. The Passive safety products include modules and components for passenger and driver-side airbags, side-impact airbag protection systems, seatbelts, steering wheels, inflator technologies, whiplash protection systems and child seats, and components for such systems, as well as passive safety electronic products, such as restraint electronics and crash sensors. The Active safety products include camera-based vision systems, night driving assist, automotive radars, brake controls, positioning systems, electronic control units, and other active safety systems. As of December 31, 2016, including joint venture operations, the Company had approximately 78 production facilities in 25 countries, consisting of both component factories and assembly factories.
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