Lear is not a “story stock.” It’s the kind of company that shows up in your portfolio because the math works, not because it’s going to dominate headlines. And right now, the math is pretty compelling.
Shares of Lear (LEA) are trading around $119.91 after a down day (about -1.44%), and the stock is sitting below its short-term moving averages while still holding a solid uptrend from last year’s lows. That’s a useful combination for a trade idea: not extended, not euphoric, and not broken.
Thesis: LEA offers a rare mix in the auto-parts world: scale, diversification across Seating and E-Systems, consistent cash generation, and a valuation that already assumes a lot of bad news. If the tape simply stabilizes and Lear executes normally, the stock has a reasonable path back toward its recent highs. This is a mid-term (45 trading days) trade idea built around a rebound toward resistance, with risk defined under recent support.
Where the market is right now: LEA’s 52-week high is $127.36 (01/08/2026) and the 52-week low is $73.85 (04/09/2025). At today’s price, it’s much closer to the top than the bottom, but it’s also not “priced for perfection.” With a market cap around $6.22B, this is still a mid-cap industrial that can move when sentiment shifts.
Business basics: why anyone should care
Lear supplies the guts of the vehicle interior and the nervous system that makes modern cars work. The company operates in two segments:
- Seating: complete seat systems and major components (covers, leather/fabric, structures, mechanisms, foam, headrests), built around just-in-time delivery.
- E-Systems: electrical distribution, electronic modules, electrification and connectivity products, plus software solutions across cloud and vehicle applications.
The market should care for one simple reason: these categories sit in the “must-have” part of a vehicle bill-of-materials. Automakers can delay certain upgrades, but they can’t ship cars without seats and robust electrical architecture. That doesn’t make Lear immune to auto cycles, but it does make the business structurally relevant, including in EV platforms where electrical complexity generally rises.
Lear’s scale is also hard to ignore. The company has about 173,700 employees, and it’s been around since 1917. That longevity doesn’t guarantee returns, but it does signal deep OEM relationships and operational infrastructure that smaller suppliers can’t replicate overnight.
The numbers that matter (and why they matter for this trade)
For a trade idea, I’m less interested in painting a perfect long-term narrative and more interested in answering: Is the valuation supportive, and is the stock positioned for a move? Lear checks both boxes.
| Metric | Current Read | Why it matters |
|---|---|---|
| Price | $119.87-$119.91 | Near-term pullback, not a blow-off top |
| Market Cap | ~$6.22B | Mid-cap liquidity with room for re-rating |
| P/E | ~14.06-14.67 | Not expensive for a cash generator |
| EV/EBITDA | ~5.6 | Suggests skepticism is already embedded |
| Price/Sales | ~0.27 | Low revenue multiple for a scaled supplier |
| Free Cash Flow | $734.8M | Supports buybacks/dividends and downside |
| Price/FCF | ~8.46 | Cheap if cash flow holds up |
| Dividend Yield | ~4.12% (ratio) / ~2.57% (quote feed) | Income helps while you wait, though data varies |
| Debt-to-Equity | ~0.55 | Not a balance sheet screaming “distress” |
| Liquidity | Current ~1.35, Quick ~1.05 | Decent cushion for an industrial cycle |
Two things jump out. First, the valuation is conservative. A sub-6 EV/EBITDA multiple and sub-9 price-to-free-cash-flow multiple are not what you typically see in a market that thinks earnings are about to compound nicely. In other words, Lear does not need to “beat by a mile” to work. It just needs to avoid disappointment.
Second, cash flow is doing a lot of heavy lifting here. The dataset shows $734.8M of free cash flow and a very low price-to-cash-flow of ~4.81. That combination is why value investors keep circling the name even when auto sentiment is messy. One recent example: Oldfield Partners continued adding to its position in Q4 2025, bringing its stake to 644,286 shares valued around $73.84M (reported 01/09/2026). I don’t treat one holder as gospel, but persistent buying at higher prices tells you the valuation argument is resonating.
On the other side, you do have insider selling. Lear’s CFO sold 5,000 shares worth roughly $590,845 (reported 01/12/2026). The market’s reaction was muted and the tone around it was largely “procedural,” but it’s still worth noting because insider activity can influence sentiment in the short run.
Technical setup: what the chart is telling me
LEA is currently below its 10-day SMA (~$122.77) and slightly below its 20-day SMA (~$120.96), while still well above the 50-day SMA (~$114.05). That profile often shows up in healthy trends after a pullback: short-term pressure, intermediate support intact.
- RSI ~51.3: not overbought, not washed out. That’s good for a rebound trade because you’re not chasing a stretched oscillator.
- MACD bearish momentum: the histogram is negative (about -0.74), suggesting the pullback is real. For this trade, I want price confirmation more than indicator hope.
Volume also matters. The latest session showed roughly 765,661 shares traded, above the ~541,516 two-week average volume. A down day on elevated volume can be a warning, but it can also be a quick shakeout. The trade plan below is built to find out which one it is without taking a huge hit if we’re wrong.
Short interest isn’t extreme, but it’s present. The most recent report shows short interest around 2.10M shares with 3.7 days to cover (12/31/2025). That’s not the kind of setup that guarantees a squeeze, but it can add fuel if the stock starts pushing through resistance and shorts step aside.
Trade plan (actionable)
This is a mid-term (45 trading days) idea. Why that horizon? The stock is in a near-term pullback (MACD negative, under the 10-day) but not in a broken longer trend (above the 50-day). That usually means you need time for basing and a second push attempt toward the highs.
- Direction: Long
- Entry: $120.10
- Stop Loss: $114.40
- Target: $127.20
How I’m thinking about the levels:
- Entry $120.10 is near current pricing ($119.91) and slightly above the recent close, aiming to avoid catching a falling knife if weakness continues immediately.
- Stop $114.40 sits just above the 50-day SMA (~$114.05). If LEA loses that area decisively, the pullback thesis is wrong and I don’t want to debate it.
- Target $127.20 is just under the 52-week high ($127.36). I’d rather take profits into resistance than hope for a clean breakout on the first attempt.
If LEA chops sideways for a couple of weeks but holds above the 50-day, that’s fine. The dividend (most recently $0.77 quarterly, declared 11/20/2025) helps keep patience from becoming dead money. If it loses the 50-day with momentum, I’m out.
Valuation framing: why this isn’t priced like a “solid choice” yet
At a ~$6.22B market cap, LEA is not a tiny supplier that can be disrupted overnight, but the multiples say the market is still treating it like a cyclical with fragile profits. A price-to-sales of ~0.27 and EV/sales of ~0.35 are the kind of numbers you usually see when investors assume margins are at risk or volumes are rolling over.
Here’s the counterpoint: Lear is producing enough cash flow that the stock doesn’t need a heroic multiple expansion to work. If free cash flow stays healthy, the valuation can remain “only okay” and you can still make money on a move back to recent highs. That’s why this is a trade idea I like: you’re not relying on a story, you’re relying on math and mean reversion.
Potential catalysts (what could push the stock)
- Cash flow narrative gaining traction: the market tends to re-rate suppliers when free cash flow is resilient even in a choppy production environment.
- Institutional accumulation: Oldfield Partners adding again is one data point that value-focused funds are still buying, not distributing.
- Dividend consistency: repeated quarterly dividend declarations (including the $0.77 payment) reinforce shareholder return discipline.
- Technicals: reclaiming the 10-day/20-day moving averages would likely bring in systematic buyers that de-risk when price is below trend.
Risks and counterarguments
The cleanest thesis in the world doesn’t matter if the risks are mispriced. Lear has real ones:
- Auto cycle risk: Lear is tied to global vehicle production. If OEM builds slow more than expected, suppliers get hit fast, and “cheap” can get cheaper.
- Operating leverage works both ways: Seating and just-in-time operations can amplify volatility when volumes fluctuate or logistics costs rise.
- Technical breakdown risk: LEA is already under its 10-day and 20-day averages with bearish MACD momentum. If it slices through the 50-day (~$114), the next move can be a fast air pocket.
- Insider selling can weigh on sentiment: the CFO sale reported on 01/12/2026 may be routine, but markets sometimes interpret repeated selling poorly, especially after a strong year.
- Short interest overhang: ~3.7 days to cover isn’t extreme, but shorts can press if macro news turns negative and the chart breaks support.
Counterargument to the bullish trade: maybe the market’s low multiples are simply correct because this is a mature supplier in a structurally competitive industry. If pricing pressure and OEM bargaining power keep returns capped, LEA could stay “cheap” for a long time. In that world, you don’t get the clean rebound back to $127, you get a slow grind with sharp drawdowns on bad production headlines.
Conclusion: a solid choice, but only if it holds support
I like Lear here as a mid-term (45 trading days) long trade because the valuation and cash flow provide a cushion, while the chart offers a clear line in the sand around the 50-day moving average. At $119.91, you’re buying a scaled auto supplier at a modest earnings multiple (~14x), with a low EV/EBITDA (~5.6), and meaningful free cash flow ($734.8M) that can support shareholder returns.
What would change my mind: A decisive break below the $114 area (and especially sustained trading below the 50-day) would tell me the pullback isn’t a pause, it’s a trend change. On the upside, if LEA quickly reclaims the 20-day and starts pressing toward $127 on improving momentum, I’d stick with the plan and take profits just under that prior peak.