uploads/2016/11/alv-pm-2.png

Why Did Takata Select Autoliv and Key Safety Systems?

By

Updated

Price movement

Autoliv (ALV) has a market cap of $8.8 billion. It rose 1.4% to close at $99.11 per share on November 21, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 2.3%, 0.29%, and -18.8%, respectively, on the day.

ALV is trading 2.4% above its 20-day moving average, 1.7% below its 50-day moving average, and 8.9% below its 200-day moving average.

Article continues below advertisement

Related ETF and peers

The iShares Dow Jones US ETF (IYY) invests 0.04% of its holdings in Autoliv. The YTD price movement of IYY was 9.8% on November 21.

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

  • Delphi Automotive (DLPH) — $18.6 billion
  • Magna International (MGA) — $15.7 billion
  • Gentex (GNTX) — $5.2 billion

Latest news on Autoliv

In a press release on November 21, 2016, Reuters reported, “Takata Corp. has shortlisted Sweden’s Autoliv Inc. and US parts supplier Key Safety Systems as potential bidders for the Japanese airbag maker at the center of the world’s biggest auto recall, Bloomberg reported.”

The report continued, “Those two bidders were preferred because of their expertise in making airbag systems and safety equipment, as carmakers look for ways to improve efficiencies in Takata’s production, the report said, citing people familiar with the deal.”

Article continues below advertisement

Performance of Autoliv in 3Q16

Autoliv reported 3Q16 net sales of $2.5 billion, a rise of 13.6% compared to $2.2 billion in 3Q15. The company’s gross profit margin narrowed 490 basis points, and its operating margin narrowed 60 basis points.

Its net income and EPS (earnings per share) rose to $135.5 million and $1.56, respectively, in 3Q16, compared to $99.1 million and $1.12, respectively, in 3Q15. It reported adjusted EPS of $1.63 in 3Q16, a rise of 6.5% over 3Q15.

Autoliv’s cash and cash equivalents fell 11.3%, and its inventories rose 12.3% between 4Q15 and 3Q16. Its current ratio and long-term debt-to-equity ratio fell to 1.7x and 0.46x, respectively, in 3Q16, compared to 1.8x and 0.53x, respectively, in 4Q15.

Quarterly dividend

Autoliv has declared a quarterly dividend of $0.58 per share on its common stock. The dividend will be paid on March 2, 2017, to shareholders of record at the close of business on February 15, 2017.

Projections

Autoliv has made the following projections for 4Q16:

  • flat organic sales growth
  • ~6% sales growth from mergers and acquisitions
  • adjusted operating margin of 9.0%, excluding costs for capacity alignments and antitrust-related matters

The company has made the following projections for 2016:

  • organic sales growth of ~7%
  • ~5% sales growth from mergers and acquisitions
  • adjusted operating margin of more than 8.5%, excluding costs for capacity alignments and antitrust-related matters.

In the next article, we’ll look at Tyson Foods (TSN).

Advertisement

More From Market Realist