Critical Analysis: Lear Corporation (LEA) vs. Fox Factory Holding Corp. (NASDAQ:FOXF)

Fox Factory Holding Corp. (NASDAQ: FOXF) and Lear Corporation (NYSE:LEA) are both auto/tires/trucks companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, dividends, risk, valuation, profitability and earnings.

Dividends

Lear Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 1.4%. Fox Factory Holding Corp. does not pay a dividend. Lear Corporation pays out 13.3% of its earnings in the form of a dividend. Lear Corporation has raised its dividend for 6 consecutive years.

Insider & Institutional Ownership

96.7% of Fox Factory Holding Corp. shares are owned by institutional investors. Comparatively, 96.6% of Lear Corporation shares are owned by institutional investors. 21.4% of Fox Factory Holding Corp. shares are owned by company insiders. Comparatively, 0.5% of Lear Corporation shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Fox Factory Holding Corp. and Lear Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fox Factory Holding Corp. 0 5 1 0 2.17
Lear Corporation 3 3 4 0 2.10

Fox Factory Holding Corp. presently has a consensus price target of $34.00, suggesting a potential downside of 9.81%. Lear Corporation has a consensus price target of $147.60, suggesting a potential upside of 3.90%. Given Lear Corporation’s higher possible upside, analysts plainly believe Lear Corporation is more favorable than Fox Factory Holding Corp..

Risk and Volatility

Fox Factory Holding Corp. has a beta of 0.69, suggesting that its share price is 31% less volatile than the S&P 500. Comparatively, Lear Corporation has a beta of 1.32, suggesting that its share price is 32% more volatile than the S&P 500.

Profitability

This table compares Fox Factory Holding Corp. and Lear Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fox Factory Holding Corp. 10.67% 29.60% 16.67%
Lear Corporation 5.51% 32.34% 10.51%

Valuation and Earnings

This table compares Fox Factory Holding Corp. and Lear Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Fox Factory Holding Corp. $447.71 million 3.15 $74.45 million $1.24 30.40
Lear Corporation $19.29 billion 0.50 $1.97 billion $15.06 9.43

Lear Corporation has higher revenue and earnings than Fox Factory Holding Corp.. Lear Corporation is trading at a lower price-to-earnings ratio than Fox Factory Holding Corp., indicating that it is currently the more affordable of the two stocks.

Summary

Lear Corporation beats Fox Factory Holding Corp. on 9 of the 17 factors compared between the two stocks.

Fox Factory Holding Corp. Company Profile

Fox Factory Holding Corp. is engaged in the manufacturing, sale and service of ride dynamics products. The Company’s products fall into two categories: bikes, and powered vehicles, including side-by-sides, on-road vehicles with off-road capabilities, off-road vehicles and trucks, all-terrain vehicles (ATVs), snowmobiles, specialty vehicles and applications, and motorcycles. The Company’s brands include FOX, FOX RACING SHOX and RACE FACE. The Company’s products include 34 Factory Series FLOAT FIT4, which provides external adjustability with its fourth-generation FOX Isolated Technology and closed-cartridge damper, and includes a self-adjusting negative chamber air spring; X2 technology, utilized in its Factory Series FLOAT and DH rear shocks; PODIUM Internal Bypass, and X2 technology utilized in its 2.5 PODIUM shocks for side-by-sides that feature high and low speed rebound adjustment, high and low speed compression adjustment, and a dual-rate spring for the rear shocks.

Lear Corporation Company Profile

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.

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