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Piper Jaffray Rated Autoliv as ‘Neutral’

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Price movement of Autoliv

Autoliv (ALV) has a market cap of $10.7 billion. It fell by 3.0% to close at $121.15 per share on June 10, 2016.

The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -2.5%, -2.3%, and -1.9%, respectively, on the same day. This means that ALV is trading 1.6% below its 20-day moving average, 1.7% above its 50-day moving average, and 6.1% above its 200-day moving average.

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Related ETF and peers

The iShares Morningstar Mid-Cap Value ETF (JKI) invests 0.81% of its holdings in Autoliv. This ETF selects from the 70%–90% range of US market capitalization, sorting value stocks based on ten factors. The YTD price movement of JKI was 7.2% on June 10, 2016.

The market caps of Autoliv’s competitors are as follows:

  • Delphi Automotive (DLPH) – $18.4 billion
  • Magna International (MGA) – $16.0 billion
  • Gentex Corporation (GNTX) – $4.6 billion

Autoliv’s rating

Piper Jaffray has initiated the coverage of Autoliv’s (ALV) rating as “neutral” and set the stock price target at $123.00 per share.

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Performance in fiscal 1Q16

Autoliv (ALV) reported fiscal 1Q16 net sales of $2.4 billion, a rise of 11.8% compared to $2.2 billion in fiscal 1Q15. Sales of airbag products, seatbelt products, passive safety electronic products, and active safety products rose by 12.2%, 1.6%, 17.5%, and 50.7%, respectively, in fiscal 1Q16 as compared to fiscal 1Q15.

The company’s cost of sales as a percentage of net sales fell by 2.5%. Its operating income rose by 156.5% in fiscal 1Q16 compared to fiscal 1Q15.

ALV’s net income and EPS (earnings per share) rose to $133.2 million and $1.51, respectively, in fiscal 1Q16. This is compared to net income and EPS of $35.7 million and $0.40, respectively, in fiscal 1Q15.

Autoliv’s cash and cash equivalents fell by 12.9%. Its inventories rose by 7.8% in fiscal 1Q16, compared with fiscal 4Q15. Its current ratio and debt-to-equity ratio fell to 1.7x and 1.1x, respectively, in fiscal 1Q16. This is compared to 1.8x and 1.2x, respectively, in fiscal 4Q15.

Quarterly dividend

Autoliv declared a quarterly dividend of $0.58 per share on its common stock. The dividend will be paid on September 1, 2016, to shareholders of record at the close of business on August 18, 2016.

Projections

Autoliv (ALV) made the following projections for fiscal 2Q16 and fiscal 2016:

Fiscal 2Q16:

  • The company expects net sales growth of ~10%.
  • It expects sales growth from merger and acquisition activities (Autoliv-Nissin Brake Systems and MACOM) of ~6%.
  • It expects an adjusted operating margin of 8.5%. This excludes costs for capacity alignments and antitrust-related matters. This projection includes integration and purchase accounting-related costs for the joint venture with Nissin Kogyo of ~$10 million.

Fiscal 2016:

  • The company expects net sales growth of more than 7%.
  • It expects sales growth from merger and acquisition activities (Autoliv-Nissin Brake Systems and MACOM) of ~5%.
  • It expects an adjusted operating margin of 9.0%. This excludes the costs for capacity alignments and antitrust-related matters. This projection includes integration and purchase accounting-related costs for the joint venture with Nissin Kogyo of $20 million–$30 million.
  • The tax rate of ~29% excludes any discrete items.
  • It expects operational cash flow of ~0.8 billion.

Next, we’ll look at BRF S.A.

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