Back to top

Value

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

The auto industry is smoking hot. Autoliv Inc. (ALV - Analyst Report), which makes automobile safety systems, reported a record third quarter in October. Even though this Zacks #1 Rank (strong buy) has soared off its March 2009 low, shares are still trading at an affordable 12.3x forward estimates.

On Nov 8, Autoliv announced it was building an airbag inflator plant at its Taubate location near Sao Paulo Brazil in response to new Brazil airbag rules.

Brazil has tightened its safety laws, requiring that all new vehicles have driver and passenger airbags by 2013. By 2014, all vehicles sold in Brazil must have front airbags.

Currently, Autoliv ships the inflator part of the airbag from its plants in Europe and the United States. But the inflator makes up about half the cost of the airbag. Demand will be strong enough that it will be cheaper to simply make the inflator directly in Brazil.

Autoliv has 35% of the total global inflator market and manufactures inflators in 6 countries - with Brazil to be the 7th.

Automobile sales are surging in Brazil as the middle class expands. Brazil is on pace to become the 4th largest automotive market this year, replacing Germany.

Autoliv Beat By 24% in the Third Quarter

On Oct 26, Autoliv reported its third quarter results and easily beat the Zacks Consensus Estimate by 29 cents as it saw its best third quarter in its history. Earnings per share were $1.51 compared to the consensus of $1.22 per share.

Sales surged 31% to $1.74 billion as organic sales jumped 23% in that period. Global light vehicle production grew only 13% in that same period so Autoliv's sales outpaced it.

Outlook for the Fourth Quarter is Bullish

Autoliv expects the sales growth to continue in the fourth quarter as it forecasts consolidated net sales to jump by 15% compared to the fourth quarter of 2009. Organic sales are expected to climb 12% in that period.

For the full year, that would be sales growth of 40%.

Zacks Consensus Estimate Rise

Analysts continue to see further upside in 2010. The 2010 Zacks Consensus has jumped to $6.18 from $5.66 in the last 60 days.

This is expected earnings growth of 390%. Autoliv made just $1.26 in 2009.

But they definitely see a slowdown in the growth in 2011. The 2011 Zacks Consensus has moved up to $6.67 from $6.04 in the last 60 days but this is earnings growth of just 7.9%.

ALV Still a Value Stock

Despite shares being at new 5-year highs, there is still value in Autoliv.

It's price-to-book ratio is well within the value range of under 3.0 at 2.4. The company also has an attractive price-to-sales ratio of about 1.0.

Autoliv's outstanding return on equity (ROE) of 21.2% is in line with its peers.

As an added bonus for shareholders, Autoliv pays a dividend currently yielding 1.9%.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
LAKE SHORE G LSG 0.77 +6.05%
QUESTCOR PHA QCOR 80.07 +2.47%
VIPSHOP HOLD VIPS 156.35 +1.82%
ENLINK MIDST ENLC 36.29 +1.60%
BNC BANCORP BNCN 17.33 +1.58%