Updated Research Report on Autoliv - Analyst Blog

On Apr 4, 2014, we issued an updated research report on Autoliv, Inc. ALV.

This Zacks Rank #2 (Buy) stock reported an improvement of 7.6% in its earnings per share of $1.70 in the fourth quarter, beating the Zacks Consensus Estimate of $1.49. Revenues increased 14.6% to a record high of $2.35 billion, beating the Zacks Consensus Estimate of $2.24 billion.

Autoliv has a strong cash position and balance sheet. This allows the company to actively pursue capital deployment strategies to boost shareholders' value. Autoliv also benefits from its innovative products.

For full-year 2014, the company anticipates rise in organic sales by 5% due to strong growth in China and the Americas and high demand for Active Safety products. Autoliv also announced an operating margin guidance of around 9%, excluding capacity alignments and antitrust investigation charges.

However, Autoliv faces significant risks due to customer concentration. Moreover, light vehicle production (LVP) in Western Europe is not expected to recover soon. It is expected to increase only 1% in 2014. This will hamper sales of Autoliv. The company also faces supply-chain issues in Brazil.

Though Autoliv occupies a leading position in the market, it faces stiff competition in passive safety products. Moreover, the market for active safety products is fragmented, leading to many competitors.

Autoliv reported positive earnings per share in 3 of the trailing 4 quarters with an average beat of 4.06%. The Zacks Consensus Estimate for the company's 2014 earnings per share stands at $6.36, up 9.24% over 2013.

Key Picks from the Sector

Some better-ranked stocks in the sector include Gentherm Inc. THRM, Valeo SA (VLEEY) and Allison Transmission Holdings, Inc. ALSN, all of which carry a Zacks Rank #1 (Strong Buy).