Lear Corporation (NYSE:LEA) shares dropped 14.81% in premarket trading on Friday after the automotive technology supplier reported third-quarter 2026 revenue slightly below expectations and issued full-year sales guidance that fell short of analyst forecasts, despite delivering stronger-than-expected earnings.
The company posted adjusted earnings per share of $3.71, exceeding Wall Street’s consensus estimate of $3.32. Quarterly revenue increased 2% year over year to $5.8 billion, compared with analysts’ expectations of $5.82 billion.
Full-Year Revenue Forecast Falls Short
Lear projected 2026 revenue of between $23.35 billion and $23.75 billion, with the midpoint of $23.55 billion below the analyst consensus of $23.79 billion.
However, the company maintained its full-year core operating earnings guidance of $1.08 billion to $1.2 billion, expecting operational improvements and restructuring savings to offset weaker revenue and higher input costs.
Profitability Improves Despite Lower Vehicle Production
Core operating earnings increased 6% to $256 million from $241 million a year earlier, while net income rose 26% to $137 million. Adjusted net income climbed 23% to $185 million.
The improvements came despite a 2% decline in global vehicle production, including decreases of 5% in North America and 7% in China.
“Lear delivered improved year-over-year revenue and core operating earnings for the fourth consecutive quarter despite lower industry production,” said Ray Scott, Lear’s President and Chief Executive Officer. “These results keep us on track to deliver our full-year earnings guidance.”
Cash Flow Declines as Share Buybacks Continue
Lear reported free cash flow of $158 million, down from $307 million in the corresponding period last year. Operating cash flow declined to $329 million from $444 million.
The company also completed its full-year share repurchase target of $350 million, including $175 million of shares bought back during the third quarter.
Despite stronger earnings and improved profitability, investors focused on the weaker revenue outlook and declining cash generation, sending Lear shares sharply lower ahead of the opening bell.