Initiated 2026-10-27 · Price $16.75 (as of 2026-10-27 9:54 AM ET, market open, stockanalysis) · Mkt cap $1.29bn (77.1mm shares; $1.31bn on 78.2mm diluted) · Consumer discretionary / auto parts (seating) · Model: verified

Rating: Hold — Conviction: Low

Adient is cheap at 4.0x EBITDA after a 30% fall in a year, with EBITDA steady at $880–940mm for three years and nothing maturing before 2031. But little of that EBITDA reaches shareholders after interest, restructuring, capex and ~$90mm a year paid to JV partners, and the Base upside needs margin gains three years of restructuring haven't delivered. With debt at 65% of capital, the equity is worth roughly zero in the Bear case, so we wait for FY2027 guidance to show margins actually rising before calling it a Buy.

Conviction tests (3a-v-c): T1 fail (Hold → Buy at −1pp: Base midpoint +86%; +1pp gives +22%, still Hold) · T2 fail (Gordon DCF alone +87% reads Buy; exit DCF alone +13% reads Hold) · T3 fail (other_claims is an estimate: JV partners' interests valued on earnings rather than book; at book, Base value rises 15%) · T4 pass (no pending deal, ruling or single-contract event; the CFO change on 2026-11-16 is not a value event)

Model value range vs price
Bear $0.00Base $25.18Bull $64.75Price $16.75

Business overview

Adient is the largest independent maker of complete car seats, and of the foam, trim, frames and mechanisms inside them. FY2025 sales were $14.5bn; in 9M FY2026 the split was Americas 48%, EMEA 32% and Asia 21%. Segment adjusted EBITDA came 44% from the Americas, 13% from EMEA and 44% from Asia. ~$3bn a year of unconsolidated China JV sales add ~$70mm of equity income. Earnings turn on (1) production on Adient's platforms (Detroit trucks, European OEMs, Chinese local OEMs); (2) recovery of foam, steel and freight costs, about two quarters late; (3) EMEA restructuring (Q3 margin 1.2%).

Competition

The seating market is concentrated. The 10-K names Lear, Toyota Boshoku, Forvia, Magna and Yanfeng, plus Chinese seat makers following their OEMs. Lear is the listed comparable that matters. Its Seating segment grew 3% to $4.6bn in calendar Q2 2026 (2% organic), at a 6.7% adjusted margin (Lear Q2 call, 2026-07-31). Over the overlapping quarter, Adient grew consolidated sales 5% at a 5.7% margin. Pressure shows first in China: unconsolidated JV sales fell 14% in Q3 as Western combustion-engine platforms lost share to NEVs. New local-OEM wins carry lower margins. On the same stockanalysis basis, Lear trades at 4.8x TTM EV/EBITDA and Magna at 5.2x, against Adient's 3.9x.

Bull case

  1. Margins finally expand — the ~$35–40mm FY2026 Middle East cost hit rolls off (foam pass-through covers ~90%, lagged), and EMEA restructuring plus automation lift margin from 5.9% toward 7%+. Plays out if FY2027 guidance shows EMEA recovering. Model: ebitda_margin
  2. Growth over market — Americas launches and onshoring plus China local-OEM programmes (NIO, Chery) grow sales 3–4% a year net of the metals roll-off. Plays out if global production holds. Model: rev_growth, terminal_growth
  3. Re-rating toward Lear/Magna — 4.0x model-basis EBITDA prices continued stagnation. Visible free cash flow growth plus an upsized buyback would move the multiple toward ~5x. Plays out if FY2027 FCF clearly beats ~$130mm. Model: exit_ev_ebitda

Bear case

  1. Europe and China erode — EMEA stays near break-even on lower European production. Western JVs in China keep losing combustion-engine volume, and local-OEM wins dilute margin. Margin falls to ~5% and FY2027 sales drop ~6% in a production downturn. Plays out if European and Chinese ICE output keeps falling. Model: ebitda_margin, rev_growth
  2. Cash conversion stays thin — ~$885mm of FY2026 EBITDA becomes only ~$130mm of FCF after interest (~$185mm), cash tax (~$125mm), capex (~$300mm) and restructuring (~$100mm); JV partners take ~$90mm more, and capex rises in FY2027. With 65% debt, including a floating $1.12bn term loan, small misses hit the equity directly. Plays out if restructuring cash stays near $100mm and rates stay high. Model: capex_pct_rev, wacc
  3. Cycle and share loss cap the terminal value — Chinese seat makers follow their OEMs abroad, and auto-supplier multiples stay at trough levels. Plays out if Chinese-brand vehicles keep gaining share in Europe and emerging markets. Model: terminal_growth, exit_ev_ebitda

Valuation & balance sheet

Metric (definition) Current Own history (range or 5y avg) Peers Source, as-of
EV/EBITDA, model basis (mkt cap on 78.2mm diluted − cash + debt face + NCI at earnings value + pension; excl. operating leases) 4.05x FY2025/LTM adj. EBITDA $881mm n/a (unverified) not computed on this basis 10-Q 2026-06-30; 8-K 2026-08-20; price 2026-10-27
EV/EBITDA TTM (stockanalysis, lease-inclusive) 3.88x n/a (unverified) LEA 4.80x · MGA 5.21x · BWA 6.31x · ALV 6.51x stockanalysis, 2026-10-27
P/E forward (stockanalysis consensus) 6.5x (TTM 28.1x, restructuring-depressed) 52-week price change −30% LEA 7.6x · MGA 8.7x · BWA 10.1x · ALV 10.6x stockanalysis, 2026-10-27
FCF yield (company FY2026 FCF guide ~$130mm / mkt cap) ~10% (before ~$90mm NCI dividends) FCF $204mm FY2025, $161mm 9M FY2026 LEA 14.8% · MGA 19.1% · BWA 10.8% · ALV 8.8% (stockanalysis TTM) Q3 release 2026-08-05; stockanalysis

Model-implied value range (from model-summary.json; generic module, Gordon-growth DCF and exit-EV/EBITDA DCF, midpoints): Bear $0.00 · Base $25.18 · Bull $64.75 per share, i.e. implied returns of −100.0% / +50.3% / +286.6% vs $16.75. These ranges show how the bull and bear drivers translate into value; they are not price targets. The price sits two-thirds of the way from Bear to Base. The Base return contradicts a Hold; we keep the call for three reasons. (1) Most of the upside comes from the Gordon method ($31.37). Its terminal value implies ~5.5x Y5 EBITDA against today's 4.05x. The exit method uses 4.0x, a ~1% de-rating, and gives $18.99 (+13%). (2) Base needs margin to rise from 5.9% to 6.3%; flat at 5.9%, the midpoint is $19.98 (+19%). (3) The Bear prints $0.00 because value is floored. A 3.25x exit on 5% margins leaves EV below $1.5bn of net debt plus $0.76bn of JV-partner and pension claims.

Balance sheet: net leverage 1.70x FY0 EBITDA on the model basis (company: 1.66x at 2026-06-30, target 1.5–2.0x); coverage 5.1x. Liquidity is $924mm of cash plus $834mm available on an undrawn $1.0bn ABL (matures October 2030). The nearest material maturity is the $1.12bn Term Loan B in January 2031, after the August 2026 refinancing retired the 7.00% 2028 secured notes. Ratings: n/a (unverified).

Model note: Built and verified (LibreOffice matched all 3,207 formula cells). Unverified input: market.other_claims ($758mm): NCI at LTM NCI income $75mm × 8.7 = $650mm (book $359mm) plus a $108mm pension deficit; at book, Base is $28.90. Assumptions without basis: none. No consistency CHECKs. Base WACC 9.0% is a +0.77pp adjustment over the 8.23% CAPM/market-weight arithmetic (β 1.61, rf 5.00%, 65% debt); the ~50/50 target structure gives 9.34%. capex_pct_rev includes cash restructuring and the FCF bridge's "Other" line, tying model FCF to the ~$130mm guide. Model EPS (Base Y1 $3.56) overstates reported EPS: it ignores NCI income, adds back stock compensation and taxes at 25%, not the ~39% adjusted rate; there is no EPS guide and EPS doesn't feed value. FY0 cash and debt are at 2026-06-30 (pro forma for the refinancing), with a $282mm NWC offset for 9M FCF and the Q4 timing reversal.

Relative value vs peers
MetricADNTLEAMGABWAALVPeer medianvs median
P/E (TTM)28.1x11.0x23.2x28.2x13.8x18.5x+52%
P/E (forward)6.5x7.6x8.7x10.1x10.6x9.4x−31%
PEG0.3x0.5xn/a0.8x0.9x0.8x−62%
EV/EBITDA (TTM)3.9x4.8x5.2x6.3x6.5x5.8x−33%
EV/Sales (TTM)0.2x0.3x0.5x0.9x0.9x0.7x−72%
P/B0.8x1.1x1.4x2.0x3.4x1.7x−56%
FCF yield (TTM)22.8%14.8%19.1%10.8%8.8%12.8%+10.1pp
Dividend yieldn/a2.6%3.1%1.2%3.0%2.8%
P/E (TTM)BWA28.2xADNT28.1xMGA23.2xALV13.8xLEA11.0x
P/E (forward)ALV10.6xBWA10.1xMGA8.7xLEA7.6xADNT6.5x
PEGALV0.9xBWA0.8xLEA0.5xADNT0.3x
EV/EBITDA (TTM)ALV6.5xBWA6.3xMGA5.2xLEA4.8xADNT3.9x
EV/Sales (TTM)ALV0.9xBWA0.9xMGA0.5xLEA0.3xADNT0.2x
P/BALV3.4xBWA2.0xMGA1.4xLEA1.1xADNT0.8x
FCF yield (TTM)ADNT22.8%MGA19.1%LEA14.8%BWA10.8%ALV8.8%
Dividend yieldMGA3.1%ALV3.0%LEA2.6%BWA1.2%

As of 2026-10-27. One source and one definition for every company: TTM multiples, forward P/E on stockanalysis consensus, EV/EBITDA and EV/Sales on stockanalysis EV (lease-inclusive) and TTM EBITDA. Not the model's own EV basis (which excludes operating leases and adds noncontrolling interests). Quotes taken 2026-10-27 between 9:50 and 10:07 AM ET with the market open. Dashed line = peer median. Source: stockanalysis.com /stocks/<ticker>/statistics/, fetched 2026-10-27.

Notes. PEGs are the source's own, resting on its analyst growth estimates; the source shows none for MGA. ADNT's 0.29 rests on growth off an FY2025 adjusted-EPS base of $1.93. ADNT and BWA TTM earnings are depressed by impairments and restructuring (ADNT FY2025 included a $333mm EMEA goodwill impairment); the forward P/E is the more comparable figure. ADNT's figure on the source's own definition. Company free cash flow excludes ~$90mm/yr of dividends paid to noncontrolling interests (FY2025), and FY2026 guidance is ~$130mm (~10% of market cap). Adient pays no dividend; capital is returned by buybacks.

Scenario stress test

Reasoned from the bull/bear drivers above. The model column comes from the scenario overlays (Base case + shock).

Scenario Effect Mechanism Magnitude Model Δ value vs Base ($/sh)
S1 Fast equity crash − High-beta (1.61), 65%-debt equity de-rates; no operating channel Med −$5.98
S2 Slow bear / recession − Production cuts, fixed-cost deleverage in seat plants, trough multiple. Milder than Base − Bear ($25.18) on purpose: a two-year dip, not a permanent margin reset High −$14.76
S3 Rapid rate shock − Discount rate on a 65%-debt structure, floating TLB cost, auto-loan affordability High −$10.14
S4 Slow rate grind − Same channels, slower Low −$3.54
S5 Soft-landing cuts + Cheaper auto credit lifts production; levered cyclical re-rates High +$9.52
S6 Recession-driven cuts − Production cuts partly offset by a lower discount rate Low −$4.88
S7a Credit liquidity shock − Sub-investment-grade issuer de-rates with spreads; no maturity before 2031, ABL undrawn Med −$8.35
S7b Slow default cycle − Distressed sub-suppliers need support; dearer refinancing; weaker auto credit Med −$6.80
S8 Stagflation − Foam chemicals, steel, freight and wages recovered only with a lag; weaker volumes Med −$7.27
S9a Dollar spike − Over half of sales outside the Americas; translation cuts reported sales and EBITDA Low −$3.39
S9b Dollar slide + Mirror of S9a; FX drove much of FY2026's sales growth Low +$3.50
S10 Melt-up + High-beta deep-value cyclical re-rates Low +$3.99
S11 Energy supply shock − Petrochemical foam and freight (~$32mm hit in Q3 alone), lower ICE demand and exports Med −$5.79
S12 Mega-cap/AI derating + Rotation into cheap domestic cyclicals without recession Low +$1.99

Currently active/on watch per the playbook: S3 partially active (10Y 5.00% price leg met, pace legs short); S8, S10, S11 on watch. Brent near $115 already shows up in S11's cost channel.

Model value change vs Base, by scenario
S2 Slow bear / recession−$14.76S3 Rapid rate shock−$10.14S7a Credit liquidity shock−$8.35S8 Stagflation−$7.27S7b Slow default cycle−$6.80S1 Fast equity crash−$5.98S11 Energy supply shock−$5.79S6 Recession-driven cuts−$4.88S4 Slow rate grind−$3.54S9a Dollar spike−$3.39S12 Mega-cap/AI derating+$1.99S9b Dollar slide+$3.50S10 Melt-up+$3.99S5 Soft-landing cuts+$9.52

What would change the call

Upgrades if: FY2027 guidance (due with FY2026 results, ~early November) implies adjusted EBITDA margin of at least 6.2% and FCF above $200mm, or EMEA margin recovers above 3% for two quarters. Downgrades if: FY2026 lands below ~$885mm EBITDA or ~$130mm FCF, FY2027 guidance implies margin below 5.7%, or net leverage rises above 2.0x.

Watch items

Sources