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If you are trying to figure out whether Autoliv’s current share price offers genuine value or not, you are in the right place for a clear, valuation focused look at the stock.
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Autoliv shares last closed at US$128.45, with returns of 4.2% over 7 days, 5.9% over 30 days, 5.2% year to date, 36.0% over 1 year, 71.8% over 3 years and 66.4% over 5 years that may have changed how the market views its potential and risk.
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Recent coverage around Autoliv has centered on its position as a key player in the global auto safety market and how that ties into long term demand from automakers. This context helps explain why the stock’s performance over multiple time frames has been getting more attention from investors looking at both growth prospects and risk.
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On our valuation checks, Autoliv currently holds a 5/6 valuation score. We will break this down using several common valuation approaches, then finish by looking at a fuller way to think about what that score really means for you.
A Discounted Cash Flow, or DCF, model takes estimates of a company’s future cash flows and discounts them back into today’s dollars so you can compare that value with the current share price.
For Autoliv, the model used is a 2 Stage Free Cash Flow to Equity approach. The company’s last twelve month free cash flow is reported at about $474.4 million. Analysts provide explicit free cash flow estimates out to 2028, where free cash flow is projected at $711.3 million, and Simply Wall St extends those forecasts further using its own extrapolations.
Bringing all those projected cash flows back to today using the DCF model gives an estimated intrinsic value of about US$170.11 per share. Compared with the recent share price of US$128.45, this implies the stock trades at about a 24.5% discount to that DCF estimate, which indicates that Autoliv appears undervalued on this specific cash flow based approach.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Autoliv is undervalued by 24.5%. Track this in your watchlist or portfolio, or discover 880 more undervalued stocks based on cash flows.
For a profitable company like Autoliv, the P/E ratio is a useful way to relate what you pay for each share to the earnings the business is currently generating. Investors usually expect higher P/E ratios when they see stronger growth potential or lower risk, and lower P/E ratios when growth expectations are more muted or risks are higher.
Autoliv currently trades on a P/E of 12.76x. That sits below the Auto Components industry average of 23.00x and also below the peer group average of 41.18x. Simply comparing to those benchmarks suggests the market is applying a lower earnings multiple to Autoliv than to many of its listed peers.
Simply Wall St’s Fair Ratio for Autoliv is 13.61x. This is a proprietary estimate of what a reasonable P/E could be given the company’s earnings growth profile, industry, profit margins, market cap and risk characteristics. It can be more informative than a simple peer or industry comparison because it attempts to adjust for those company specific factors. With the current P/E of 12.76x sitting below the Fair Ratio of 13.61x, Autoliv appears undervalued on this earnings multiple approach.
Result: UNDERVALUED
P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1437 companies where insiders are betting big on explosive growth.
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce Narratives. These let you attach a clear story about Autoliv’s future revenue, earnings and margins to a financial forecast that leads to your own fair value, all within Simply Wall St’s Community page where millions of investors share their views. You can see, for example, one Narrative that leans on higher 2028 earnings near US$1.0b and a fair value closer to US$145 because it expects stronger safety technology adoption, and another that anchors on earnings around US$797.4m and a fair value nearer US$106 because it puts more weight on risks such as tariffs or pricing pressure. You can then compare each Narrative’s fair value to today’s price and watch those fair values refresh automatically as new Autoliv news, earnings or analyst updates come through.
Do you think there’s more to the story for Autoliv? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include ALV.
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