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How to Approach Autoliv Stock After Q4 Earnings Release?
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Key Takeaways
ALV reported Q4 adjusted EPS of $3.19 on $2.82B sales, up year over year.
Autoliv sees record 2025 sales, near-44% share, and strong China and India growth from new launches.
ALV flags 2026 headwinds from raw materials and capex, but targets 10.5-11% adjusted margin.
Autoliv, Inc. (ALV - Free Report) , a global leader in automotive safety, reported fourth-quarter 2025 adjusted earnings of $3.19 per share, which rose from $3.05 reported in the year-ago quarter. The company reported net sales of $2.82 billion in the quarter, which increased from $2.62 billion recorded in the year-ago quarter.
Despite inflationary pressure in North America and high material costs, strong growth in India and China is creating a balanced outlook for the stock after the fourth-quarter earnings release.
New Launches & Strategic Partnership to Aid ALV
Autoliv is benefiting from its strong innovation pipeline in airbags, seatbelts, steering wheels, and next-generation mobility safety solutions. In 2025, its global market share was nearly 44%, approximately 5 percentage points higher than in 2018. The company delivered record-high quarterly and full-year sales in 2025, driven by strong growth in India and with Chinese OEMs. Sales to Chinese OEMs rose nearly 40% in the quarter, while India accounted for nearly half of global organic growth. The company expects to continue significantly outperforming light vehicle production in China and India in 2026, with sales projected to exceed industry production by about 1 percentage point, supported by new launches and content per vehicle growth.
Autoliv's strategic partnerships are bolstering its prospects. It plans to form a joint venture with Hangsheng Electric (HSAE) to develop and manufacture advanced safety electronics for China’s automotive market, with establishment expected in first-quarter 2026. Autoliv will hold a 40% stake and HSAE 60%, combining Autoliv’s safety expertise with HSAE’s electronics capabilities to serve Chinese and international OEMs in China. Separately, Autoliv signed a strategic agreement with CATARC to jointly advance automotive safety standards through collaboration in R&D, testing, certification, and standards alignment, supporting the global expansion of Chinese automakers.
Autoliv is making strong progress on its structural cost reduction program, focusing on direct labor efficiency and headcount reductions. The company has achieved approximately $100 million of the $130 million in planned cost savings so far, with about $20 million expected in 2026 and the remaining $10 million in 2027. As a result, the company’s margins are improving. Autoliv expects to achieve an adjusted operating margin of 10.5-11% in 2026 compared with 10.3% in the prior year.
Autoliv’s improving financial position and shareholder-friendly actions support investor confidence. As of Dec. 31, 2025, the company’s long-term debt stood at $1.57 billion, down from $1.77 billion as of the end of third-quarter 2025, with a manageable long-term debt-to-capitalization ratio of 40%. It also raised its fourth-quarter dividend by 24% to 87 cents. Autoliv’s 2029 stock repurchase program authorizes up to $2.5 billion in share buybacks from July 1, 2025, through Dec. 31, 2029.
Rising Gold Prices & High Capital Requirement to Hurt Autoliv
North America is facing inflationary pressure as automakers pass on tariff costs, with S&P Global forecasting a 2% decline in light vehicle production in 2026 amid uncertainty from upcoming USMCA negotiations. Production in China is expected to decline modestly, while Korea remains subdued due to weak domestic demand and a challenging export environment. Overall, global light vehicle production is expected to decline by 1%, with geopolitical risks, such as tariffs, trade restrictions, and policy shifts, posing the main downside. The company expects flat organic sales for the full-year 2026.
Autoliv expects margin headwinds from higher raw material costs—particularly gold—and increased depreciation as recent investments ramp up. In 2025, raw material headwinds were about $10 million in 2025. In 2026, the raw materials headwinds are expected to rise to roughly $30 million, driven mainly by non-ferrous metals. Gold is expected to account for the majority of the impact, followed by steel and copper.
Reduced scrappage and new energy vehicle incentives with high inventories in China are expected to drive a more than 10% decline in Chinese light vehicle production in first-quarter 2026, contributing to a nearly 4% year-over-year drop in global production and a 14% sequential decline versus fourth-quarter 2025. As a result, adjusted operating margin in the first quarter is expected to decline significantly versus the first quarter of 2025, driven by lower production volumes, reduced engineering income, and higher depreciation and amortization relative to sales.
Capital expenditure in 2026 is expected to be slightly higher than in 2025, reflecting investments in new manufacturing capacity to support growth in fast-growing regions such as India. Although investment in capacity expansion bodes well for long-term growth, it may hurt near-term cash flows.
Conclusion
Solid earnings growth with a dominant global market position and strong exposure to high-growth regions like China and India enhance Autoliv’s prospects. Ongoing new product launches, strategic partnerships, and content-per-vehicle expansion support revenue resilience despite softer global auto production. Margin improvement from structural cost reductions, declining debt, higher dividends, and an aggressive share buyback program further strengthens its long-term prospects. These factors, combined with its Zacks Rank #3 (Hold), make the stock worth retaining.
The Zacks Consensus Estimate for MOD’s fiscal 2026 sales and earnings implies year-over-year growth of 17.2% and 14.3%, respectively. The EPS estimate for fiscal 2026 has improved a penny in the past 60 days. The EPS estimate for fiscal 2027 has improved 9 cents in the past seven days.
The Zacks Consensus Estimate for F’s 2025 sales implies year-over-year growth of 0.3%. EPS estimates for 2025 and 2026 have improved 7 cents and 11 cents, respectively, in the past 30 days.
The Zacks Consensus Estimate for REVG’s fiscal 2026 sales and earnings implies year-over-year growth of 8.1% and 37.8%, respectively. EPS estimates for fiscal 2026 and 2027 have improved 20 cents and 26 cents, respectively, in the past 60 days.
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How to Approach Autoliv Stock After Q4 Earnings Release?
Key Takeaways
Autoliv, Inc. (ALV - Free Report) , a global leader in automotive safety, reported fourth-quarter 2025 adjusted earnings of $3.19 per share, which rose from $3.05 reported in the year-ago quarter. The company reported net sales of $2.82 billion in the quarter, which increased from $2.62 billion recorded in the year-ago quarter.
Despite inflationary pressure in North America and high material costs, strong growth in India and China is creating a balanced outlook for the stock after the fourth-quarter earnings release.
New Launches & Strategic Partnership to Aid ALV
Autoliv is benefiting from its strong innovation pipeline in airbags, seatbelts, steering wheels, and next-generation mobility safety solutions. In 2025, its global market share was nearly 44%, approximately 5 percentage points higher than in 2018. The company delivered record-high quarterly and full-year sales in 2025, driven by strong growth in India and with Chinese OEMs. Sales to Chinese OEMs rose nearly 40% in the quarter, while India accounted for nearly half of global organic growth. The company expects to continue significantly outperforming light vehicle production in China and India in 2026, with sales projected to exceed industry production by about 1 percentage point, supported by new launches and content per vehicle growth.
Autoliv's strategic partnerships are bolstering its prospects. It plans to form a joint venture with Hangsheng Electric (HSAE) to develop and manufacture advanced safety electronics for China’s automotive market, with establishment expected in first-quarter 2026. Autoliv will hold a 40% stake and HSAE 60%, combining Autoliv’s safety expertise with HSAE’s electronics capabilities to serve Chinese and international OEMs in China. Separately, Autoliv signed a strategic agreement with CATARC to jointly advance automotive safety standards through collaboration in R&D, testing, certification, and standards alignment, supporting the global expansion of Chinese automakers.
Autoliv is making strong progress on its structural cost reduction program, focusing on direct labor efficiency and headcount reductions. The company has achieved approximately $100 million of the $130 million in planned cost savings so far, with about $20 million expected in 2026 and the remaining $10 million in 2027. As a result, the company’s margins are improving. Autoliv expects to achieve an adjusted operating margin of 10.5-11% in 2026 compared with 10.3% in the prior year.
Autoliv’s improving financial position and shareholder-friendly actions support investor confidence. As of Dec. 31, 2025, the company’s long-term debt stood at $1.57 billion, down from $1.77 billion as of the end of third-quarter 2025, with a manageable long-term debt-to-capitalization ratio of 40%. It also raised its fourth-quarter dividend by 24% to 87 cents. Autoliv’s 2029 stock repurchase program authorizes up to $2.5 billion in share buybacks from July 1, 2025, through Dec. 31, 2029.
Rising Gold Prices & High Capital Requirement to Hurt Autoliv
North America is facing inflationary pressure as automakers pass on tariff costs, with S&P Global forecasting a 2% decline in light vehicle production in 2026 amid uncertainty from upcoming USMCA negotiations. Production in China is expected to decline modestly, while Korea remains subdued due to weak domestic demand and a challenging export environment. Overall, global light vehicle production is expected to decline by 1%, with geopolitical risks, such as tariffs, trade restrictions, and policy shifts, posing the main downside. The company expects flat organic sales for the full-year 2026.
Autoliv expects margin headwinds from higher raw material costs—particularly gold—and increased depreciation as recent investments ramp up. In 2025, raw material headwinds were about $10 million in 2025. In 2026, the raw materials headwinds are expected to rise to roughly $30 million, driven mainly by non-ferrous metals. Gold is expected to account for the majority of the impact, followed by steel and copper.
Reduced scrappage and new energy vehicle incentives with high inventories in China are expected to drive a more than 10% decline in Chinese light vehicle production in first-quarter 2026, contributing to a nearly 4% year-over-year drop in global production and a 14% sequential decline versus fourth-quarter 2025. As a result, adjusted operating margin in the first quarter is expected to decline significantly versus the first quarter of 2025, driven by lower production volumes, reduced engineering income, and higher depreciation and amortization relative to sales.
Capital expenditure in 2026 is expected to be slightly higher than in 2025, reflecting investments in new manufacturing capacity to support growth in fast-growing regions such as India. Although investment in capacity expansion bodes well for long-term growth, it may hurt near-term cash flows.
Conclusion
Solid earnings growth with a dominant global market position and strong exposure to high-growth regions like China and India enhance Autoliv’s prospects. Ongoing new product launches, strategic partnerships, and content-per-vehicle expansion support revenue resilience despite softer global auto production. Margin improvement from structural cost reductions, declining debt, higher dividends, and an aggressive share buyback program further strengthens its long-term prospects. These factors, combined with its Zacks Rank #3 (Hold), make the stock worth retaining.
Stocks to Consider
Some better-ranked stocks in the auto space are Modine Manufacturing Company (MOD - Free Report) , Ford Motor Company (F - Free Report) and REV Group, Inc. (REVG - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for MOD’s fiscal 2026 sales and earnings implies year-over-year growth of 17.2% and 14.3%, respectively. The EPS estimate for fiscal 2026 has improved a penny in the past 60 days. The EPS estimate for fiscal 2027 has improved 9 cents in the past seven days.
The Zacks Consensus Estimate for F’s 2025 sales implies year-over-year growth of 0.3%. EPS estimates for 2025 and 2026 have improved 7 cents and 11 cents, respectively, in the past 30 days.
The Zacks Consensus Estimate for REVG’s fiscal 2026 sales and earnings implies year-over-year growth of 8.1% and 37.8%, respectively. EPS estimates for fiscal 2026 and 2027 have improved 20 cents and 26 cents, respectively, in the past 60 days.