Intrinsic Value Autoliv, Inc. (0HJH.L)

• Previous Close: £120.01
• Intrinsic Value: £44.56
• Upside potential: -63%

Stock Valuation Context

Business Model And Market Position

Autoliv, Inc. is a global leader in automotive passive safety systems, specializing in technologies that protect vehicle occupants and pedestrians. The company designs and manufactures a comprehensive portfolio of products, including airbag modules, seatbelts, steering wheels, and inflator technologies, alongside emerging solutions like battery cut-off switches and connected safety services for powered two-wheelers. Its revenue model is driven by long-term contracts with major automotive manufacturers, ensuring steady demand aligned with vehicle production cycles. Operating in a highly regulated industry, Autoliv benefits from stringent safety standards that create barriers to entry for competitors. The company holds a strong market position, particularly in Europe, the Americas, and Asia, supported by its technological expertise and economies of scale. Autoliv’s focus on innovation, such as advanced pedestrian protection systems, reinforces its competitive edge in an industry where safety performance and reliability are critical. Its diversified geographic presence mitigates regional demand fluctuations, while its partnerships with leading automakers underscore its reputation as a trusted supplier in the automotive safety ecosystem.

Revenue Profitability And Efficiency

Autoliv reported revenue of $10.39 billion for the latest fiscal year, with net income of $647 million, reflecting a net margin of approximately 6.2%. The company generated $1.06 billion in operating cash flow, demonstrating solid cash conversion from operations. Capital expenditures of $580 million indicate ongoing investments in production capacity and R&D, essential for maintaining technological leadership in automotive safety systems.

Earnings Power And Capital Efficiency

Diluted EPS stood at $8.03, supported by efficient cost management and scalable manufacturing operations. The company’s ability to sustain profitability amid industry cyclicality highlights its operational resilience. Autoliv’s capital allocation prioritizes innovation and capacity expansion, ensuring alignment with evolving automotive safety regulations and customer requirements.

Balance Sheet And Financial Health

Autoliv maintains a balanced financial structure, with $330 million in cash and equivalents against total debt of $2.07 billion. The manageable leverage ratio and strong cash flow generation provide flexibility for strategic investments and shareholder returns. The company’s liquidity position is adequate to meet near-term obligations while funding growth initiatives.

Growth Trends And Dividend Policy

Autoliv’s growth is tied to global vehicle production trends and regulatory advancements in safety standards. The company has demonstrated consistent dividend payments, with a dividend per share of $2.78, appealing to income-focused investors. Future growth may be driven by increasing adoption of advanced safety technologies in emerging markets and electric vehicles.

Valuation And Market Expectations

With a market capitalization of approximately $7.73 billion and a beta of 1.37, Autoliv’s stock reflects moderate volatility relative to the broader market. Investors likely price in expectations for steady demand from automakers and incremental gains from safety regulation tailwinds, though macroeconomic risks in the automotive sector remain a consideration.

Strategic Advantages And Outlook

Autoliv’s strategic advantages include its technological leadership, global manufacturing footprint, and entrenched relationships with major automakers. The outlook remains positive, supported by increasing regulatory focus on vehicle safety and the company’s ability to innovate in high-growth segments like electric and autonomous vehicles. However, supply chain disruptions and raw material costs pose potential headwinds.

Sources

Company filings, market data