Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, auto parts supplier Lear
With that in mind, let's take a closer look at Lear's business and see what CAPS investors are saying about the stock right now.
|Headquarters (Founded)||Southfield, Mich. (1917)|
|Market Cap||$4.7 billion|
|Industry||Auto parts and equipment|
|Trailing-12-Month Revenue||$13.16 billion|
CEO Matthew Simoncini
Interim CFO Jason Cardew
|Return on Capital (Average, Past 3 Years)||8.2%|
|Cash/Debt||$1.77 billion / $697.6 million|
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
Just last week, robertshrestha listed several of Lear's positives: "Much healthier business after emerging from ch.11, solid cash position, rebounding sales, low P/E, small dividend. Nice turnaround play."
In fact, Lear currently sports a cheapish price-to-cash flow of 6.9. That represents a clear discount to listed rivals like BorgWarner (15.5), Eaton (13.8), and Johnson Controls (33.4).
CAPS member MagicDiligence elaborates on the bull case:
Lear, like many companies in the auto industry, is enjoying a rebirth. ... The company has emerged as a much more attractive entity. The debt load is down to a more manageable $700 million, which is covered over two times by cash ($1.8 billion), and has no maturities until 2018. ... Lear's robust health now is demonstrated by its commitment to return capital to shareholders, with the initiation of a small (1.2%) dividend, and a $400 million share repurchase program, in addition to a stock split earlier this year. ...
Overall, I believe the restructuring and rebound in the auto industry makes this a better area to invest than in the past, and the proliferation of new electronic gadgets and hybrid/electric powertrains create a nice opportunity for this company. My fair value is about $55, representing a nice 30% upside to current trading prices.
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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of BorgWarner. Try any of our Foolish newsletter services free for 30 days.