Autoliv ALV shares have plunged 15.2% in the trailing 12-month period, underperforming the Zacks Auto, Tires and Trucks sector’s appreciation of 9.7% and the Zacks Automotive – Original Equipment industry’s decline of 2%.
ALV’s underperformance can be attributed to declining global light vehicle production (LVP), a disadvantageous regional and customer mix, geopolitical uncertainties and continued volatility in call-off accuracy.
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Global LVP has been falling and is expected to decline by around 0.5% in 2025. The decline is more marked in North America and Europe, where first-quarter 2025 production is expected to significantly shrink due to inventory corrections. A weaker automotive market might limit ALV’s revenues.
Autoliv has been experiencing an unfavorable shift in the LVP mix, especially in China. Domestic Original Equipment Manufacturers are increasingly producing lower-content-per-vehicle (CPV) models, reducing demand for ALV’s higher-value products. The shift is negatively impacting the company’s business and revenues in one of the world’s largest automotive markets.
Macroeconomic uncertainties and geopolitical tensions are also affecting ALV’s prospects. Tariffs, trade restrictions and ongoing political instability are likely to disrupt supply chains, increase raw material costs and reduce demand, particularly in key markets like China and Europe.
Although improving, Autoliv’s call-off volatility is still higher than pre-pandemic levels and is affecting the company’s production efficiency and inventory management. Automotive sourcing in 2024 was at its lowest since 2018 due to technological and geopolitical uncertainties. This trend is expected to continue into 2025, impacting the company’s top-line growth.
Autoliv forecasts 2025 organic sales growth of around 2% compared with 0.4% reported in 2024. The adjusted operating margin is anticipated to be in the range of 10-10.5% compared to 9.7% in 2024.
Operating cash flow is expected to be $1.2 billion in 2025 compared to $1.06 billion in 2024. Autoliv expects around 2% negative currency translation effects on net sales in 2025.
The Zacks Consensus Estimate for Autoliv’s first-quarter 2025 EPS is currently pegged at $1.87, down by 8.8% over the past 30 days. The consensus mark for second-quarter 2025 EPS has moved south by 7% over the past 30 days and is currently pegged at $2.27.
Over the same timeframe, the consensus mark for Autoliv’s 2025 and 2026 EPS has fallen by 3.9% and 5.2% and is currently pegged at $9.70 and $11.01, respectively.
ALV beat the Zacks Consensus Estimate for earnings in two of the trailing four quarters and missed twice, the average negative surprise being 2.68%.
Given the persistent headwinds, ongoing market challenges and downward-trending EPS estimates, ALV’s near-term prospects remain gloomy, making it an unattractive investment.
ALV currently carries a Zacks Rank #4 (Sell), suggesting that it may be wise for investors to stay away from the stock for the time being.
If you are interested in investing in this space, consider stocks like Dana DAN, Allison Transmission Holdings ALSN and Custom Truck One Source CTOS. While DAN currently sports a Zacks Rank #1 (Strong Buy), ALSN and CTOS carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for DAN’s 2025 earnings implies 79.17% growth on a year-over-year basis.
The Zacks Consensus Estimate for ALSN’s 2025 earnings implies 12.17% year-over-year growth.
The Zacks Consensus Estimate for CTOS’ 2025 earnings implies 75% year-over-year growth.
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Autoliv, Inc. (ALV) : Free Stock Analysis Report
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