Head to Head Contrast: Lear (NYSE:LEA) & American Axle & Manufacturing (NYSE:DCH)

Lear (NYSE:LEA) and American Axle & Manufacturing (NYSE:DCH) are both consumer discretionary companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, risk, valuation, profitability, analyst recommendations, institutional ownership and dividends.

Institutional & Insider Ownership

97.0% of Lear shares are owned by institutional investors. Comparatively, 91.4% of American Axle & Manufacturing shares are owned by institutional investors. 1.0% of Lear shares are owned by company insiders. Comparatively, 2.1% of American Axle & Manufacturing shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Lear and American Axle & Manufacturing”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lear	$23.26 billion	0.27	$436.80 million	$10.73	11.91
American Axle & Manufacturing	$5.84 billion	0.27	-$19.70 million	($1.08)	-6.06

Lear has higher revenue and earnings than American Axle & Manufacturing. American Axle & Manufacturing is trading at a lower price-to-earnings ratio than Lear, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Lear and American Axle & Manufacturing’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lear	2.35%	14.18%	4.88%
American Axle & Manufacturing	-2.01%	15.94%	2.03%

Volatility and Risk

Lear has a beta of 1.26, suggesting that its stock price is 26% more volatile than the S&P 500. Comparatively, American Axle & Manufacturing has a beta of 1.63, suggesting that its stock price is 63% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Lear and American Axle & Manufacturing, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lear	0	11	4	1	2.38
American Axle & Manufacturing	1	4	4	0	2.33

Lear presently has a consensus target price of $147.08, suggesting a potential upside of 15.10%. American Axle & Manufacturing has a consensus target price of $10.14, suggesting a potential upside of 54.97%. Given American Axle & Manufacturing’s higher possible upside, analysts plainly believe American Axle & Manufacturing is more favorable than Lear.

Summary

Lear beats American Axle & Manufacturing on 10 of the 14 factors compared between the two stocks.

About Lear

Lear Corporation designs, develops, engineers, manufactures, assembles, and supplies automotive seating, and electrical distribution systems and related components for automotive original equipment manufacturers in North America, Europe, Africa, Asia, and South America. Its Seating segment offers seat systems, seat subsystems, keyseat components, seat trim covers, seat mechanisms, seat foams, and headrests, as well as surface materials, such as leather and fabric for automobiles and light trucks, compact cars, pick-up trucks, and sport utility vehicles. The company’s E-Systems segment provides electrical distribution and connection systems that route electrical signals and networks; and manage electrical power within the vehicle for various powertrains. This segment’s products comprise wire harnesses, terminals and connectors, engineered components, and junction boxes; electronic system products, including body domain control modules, smart and passive junction boxes, gateway and communication modules, integrated power modules, and high voltage switching and power control systems. It also offers software and connected services comprising Xevo Market, an in-vehicle commerce and service platform; and software and services for the cloud, vehicles, and mobile devices. In addition, this segment provides cybersecurity software; advanced vehicle positioning for automated and autonomous driving applications; and short-range communication and cellular protocols for vehicle connectivity. It offers its products and services under the XEVO, GUILFORD, EAGLE OTTAWA, ConfigurE+, INTUTM, LEAR CONNEXUSTM, EXO, JOURNEYWARE, ProTec, SMART JUNCTION BOX, STRUCSURE, AVENTINO, and TeXstyle brands. Lear Corporation was founded in 1917 and is headquartered in Southfield, Michigan.

About American Axle & Manufacturing

American Axle & Manufacturing Holdings, Inc. is a leading supplier of driveline and drivetrain systems, modules and components for the light vehicle market world wide. It manufactures Driveline and Metal Forming technologies to support electric, hybrid and internal combustion vehicles. It’s the primary supplier of driveline components to its major customers include General Motors, Stellantis and Ford. It also sells various products to Ford & Stellantis from Metal Forming segment. It has the 2 operating segments. Driveline segment comprises front & rear axles, driveshafts, differential assemblies, clutch modules, balance shaft systems, disconnecting driveline technology, and electric & hybrid driveline products and systems for light trucks, SUVs, crossover vehicles, passenger cars and commercial vehicles. Metal Forming segment comprises axle & transmission shafts, ring and pinion gears, differential gears & assemblies, connecting rods and variable valve timing products for OEM and Tier 1 automotive suppliers.