AUTOLIV, INC. (ALV): what the price assumes

In the published model solve dated 2026-Q2, anchored at $122.07, AUTOLIV, INC. (ALV) is priced for -1.6% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.

Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/ALV

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 9.5% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Relative, Growth Families that call it expensive: Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.6%); the inversion above states its own rate.

Per-Model Detail (n=16)

Economic-Unit Decomposition (Sum Of The Parts)

Only one reportable economic unit is present in the current topology source. Consolidated operating lenses remain available, but there is no multi-unit decomposition.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• Airbags and seatbelts are fitted because regulators and crash-test programs require them, and Autoliv's own 10-K puts its position at "a combined market shares of around 44%" in airbags and steering wheels, which is the structural fact behind everything else in this report.
• The exposure is to vehicle units the company does not control: its assumption for global light vehicle production in 2026 has been cut to a decline of about 2.5% from about 1%.
• Watch the Turkey manufacturing exit, announced for completion by 2028 and worth roughly $40 million a year in pretax savings once at full run rate, and the China mix, where Chinese domestic brands now make up 55% of Autoliv's China sales against 40% a year earlier.

Bull Case

Read Autoliv through the ratios alone and it looks like an ordinary parts maker: single-digit operating profitability, revenue that rises and falls with how many cars the world builds, customers holding most of the negotiating leverage. What that reading misses is that the product is not optional. Airbags and seatbelts go into a vehicle because regulators and crash-test rating programs require them, and the supplier of those parts occupies a position most component makers never come close to. The 10-K states it without decoration: "Autoliv holds a leading position in both airbags and steering wheels, with a combined market shares of around 44%."

The demand math has two independent legs, which a straight cyclical framing collapses into one. The first is how many vehicles get built, and over the long run that leg is unexciting: "LVP, has increased at an average annual growth rate of around 1.9%". The second is how much safety content each of those vehicles carries, and that one moves on regulation and crash-test ratings rather than on consumer demand. The filing describes rising installation rates for inflatable curtains, side airbags, knee airbags and front-center airbags, and locates the biggest opportunity in medium- and low-income markets where the average content per vehicle is still low. A supplier with a growth leg that responds to tightening rules is a different instrument from one that only grows when car sales do.

The evidence for the second leg is in the recent numbers. In the March 2026 quarter organic sales grew while global vehicle production was shrinking, and India alone grew organically by 38%, which the 10-Q attributes to rising safety content in Indian vehicles alongside local production growth. Profitability moved with it: full-year 2025 operating margin reached 10.1% on a GAAP basis against 9.4% the year before. On a book value of $35.07 a share the business earns a trailing return on equity of 26.9%. That is not commodity-supplier economics, and the revenue base is no longer a European bet: "Europe, the Americas and Asia, each accounting for approximately 29%, 32% and 39%, respectively, of the Company's 2025 total sales".

Capital discipline sits underneath all of it. Autoliv runs to a stated ceiling on borrowing and finished the year well inside it: "At December 31, 2025, the leverage ratio was 1.1x." against a long-term limit of 1.5x and a stated intention of holding a strong investment-grade profile. Operating profit covers the interest bill about 9.8 times over. And the share count has come down about 3.8% a year across the four years to March 2026, which is the one form of capital return that cannot be announced without also being executed.

Bear Case

Autoliv is walking out of the best profitability of its recent stretch into a year its own planning assumes will shrink. Full-year 2025 operating margin was 10.1% on a GAAP basis, up from 9.4% the year before. The March 2026 quarter gave part of that back, with the 10-Q reporting that "Operating margin was 8.6%". And the assumption for global light vehicle production this year has since been cut to a decline of roughly 2.5%, from roughly 1%. Extrapolating from a cycle high is how auto suppliers get mispriced in both directions, and the direction here is downhill.

The second problem is contractual rather than cyclical. Customer agreements "range from one year to the life of the model, which is generally four to seven years" and are often reopened before they end, and annual concessions are simply the terms of trade in this industry. The 10-K is explicit that "Price reductions are generally higher on newer products with strong volume growth compared to older products". Cost programs therefore have to run every year just to hold position. The uncomfortable corollary is that the newest volume, in China and India, is exactly where the givebacks bite hardest, and that newest volume is what the growth case leans on.

The content leg carries its own warning, written by the company. On the possibility that penetration trends stall, the risk factor concludes that "the average value of passive safety systems per vehicle could decline". Chinese domestic brands are now the majority of Autoliv's sales in that market, and whether vehicles built for that market carry the same value of safety content as the ones built for Europe is a question the mix shift has only started to answer.

Now put that against what the price asks. At about 10.6 times operating profit, the price is consistent with operating profit declining no faster than about 1.5% a year. That is a low hurdle, which is the honest reason the bear here is not an overvaluation argument. The hurdle assumes the profit base is durable rather than cyclical, and if a run of falling vehicle production pulls trailing operating profit back toward its multi-year average, the multiple the market is willing to pay usually compresses in the same stretch. The two move together, and they move the same way. Operating conditions are already noisier than the 2025 result suggests: "customer call-off volatility increased in the fourth quarter and remained higher than pre-pandemic levels". What the bear is not is a solvency story. The 10-K reports for concentration that "In 2025 : No individual customer representing 10 % or more.", borrowings are modest against operating profit, and interest is covered many times over. The risk is to the earnings base, not to the company.

Valuation

The price is not asking for much. At $117.50 the shares change hands at about 10.6 times operating profit, which inverts to company-wide operating profit falling about 1.5% a year over five years. For a supplier whose product is regulated into essentially every vehicle sold, that is a low bar, and measured against Autoliv's own record the near-term pace sits inside what it has already delivered. The demand, such as it is, is on persistence rather than on the rate.

What stands out is the direction of the disagreement among the methods. Peer-multiple approaches land well above today's price, by the widest gap in the set: put on sector multiples, this business fetches considerably more than it does. The cash-flow methods land just under the price. Book-value-plus-profitability sits a little further under, and the no-growth earnings-power lens, which averages five years of operating income, adds back one-time charges, credits no growth and capitalizes what is left, sits furthest under of all. Nothing here puts the price beyond what a standard method supports. That is the shape of a value read rather than a growth bet, and the argument it frames is about how much a cyclical profit stream is worth, not about whether the profit is there.

Against its own comparison group the position is not subtle. Autoliv turns about 9.3 cents of each revenue dollar into operating profit. Lear manages 3.6 on more than twice the revenue, Aptiv 5.4, BorgWarner 4.4 and Phinia 7.3. Yet the multiple the market applies to Autoliv sits in the lower half of that peer range. Better conversion of revenue into profit at a cheaper multiple is the entire argument, and the reason it exists is that the market is discounting the durability of the profit rather than doubting that it was earned.

The inputs underneath are ordinary and checkable. Trailing operating profit runs about $1.0 billion on roughly $11.0 billion of revenue. For the March 2026 quarter the company reported net sales of $2,753 million, up 6.8%, of which 0.8% was organic. Capital spending net of disposals ran at 3.9% of sales in 2025 against 5.4% the year before, as several footprint projects in Europe and the Americas finished.

Borrowings of about $1.75 billion, net of what the company holds, come to roughly 1.7 times trailing operating profit, and operating profit covers interest about 9.8 times. Autoliv's own leverage measure finished the year well inside its stated ceiling: "At December 31, 2025, the leverage ratio was 1.1x." against a long-term limit of 1.5x. Share count has fallen about 3.8% a year over the four years to March 2026, so each remaining share owns more of whatever the cycle delivers. For a business whose revenue is set by how many vehicles the world assembles, the financing is the part that is not in dispute; what the price is arguing about is how much of 2025's profitability survives a smaller production year.

Catalysts

The second-quarter report landed on July 17 and it split cleanly into good execution against a worse backdrop. Sales reached $2.8 billion, up 3% on the year, with organic growth of 1.0% against a global light vehicle production decline of 0.3%, so the company outgrew its market by 1.3 percentage points. Operating cash flow improved to $434 million from $277 million, the strongest second quarter the company has recorded, helped by working capital normalizing.

The backdrop is where the news was. Autoliv now assumes global light vehicle production falls about 2.5% in 2026, against the roughly 1% decline it had been planning for. It held its own expectations for the year in place anyway: organic sales growth of about flat, operating cash flow of about $1.2 billion, capital expenditure below 5% of sales, and a margin target of 10.5% to 11% stated on the company's own adjusted basis. Holding a flat top line while the market underneath contracts by that much is the specific thing to check in the next two prints.

Two structural items are now in motion. Autoliv intends to discontinue manufacturing in Turkey by 2028, moving that production into other facilities in Europe, the Middle East and Africa, affecting about 2,200 employees and expected to deliver roughly $40 million of annual pretax savings, beginning in 2027 and reaching full run rate in 2028. And the China mix keeps shifting: Chinese domestic brands now account for 55% of Autoliv's sales in that market, against 40% a year earlier. The first is a cost story with a date attached. The second decides what the content-per-vehicle leg is actually worth.

Peer Cohorts (Per Segment, With Filing Citations)

Automotive Safety Systems (reported)

• BWA (BORGWARNER INC)
• FY2025 10-K: …of related automotive components and systems. • Turbos & Thermal Technologies. This segment's products include turbochargers, eBoosters, eTurbos, emissions systems, thermal systems, gasoline ignition technology, smart remote actuators, powertrain sensors, cabin heaters, battery heaters and battery cooling systems. •…
• FY2025 10-K: …standards, performance measures and audits. New regulations and changes to existing regulations are managed in collaboration with the Company's OEM customers and implemented through its global systems and procedures designed to ensure compliance with existing laws and regulations. The Company demonstrates material…
• PHIN (PHINIA INC.)
• FY2025 10-K: …Methodology Key Assumptions Customer relationships $ 18 12 years Multi-period excess earnings Discount rate, customer attrition rate Patented and unpatented technology 9 6 years Relief-from-royalty Royalty rate, discount rate, obsolescence factor The purchase price, net of cash acquired, was allocated based on the…
• FY2025 10-K: …reported in its Aftermarket segment, to the Fuel Systems segment, as distribution will now be handled by the Fuel Systems locations that manufacture the products. This is expected to streamline the sales structure to external customers while also reducing administrative efforts. The reporting segment disclosures have…
• GTX (Garrett Motion Inc.)
• FY2025 10-K: …vehicle types sold in each geographic market. Over the past several years, we have invested heavily to be close to our Chinese, Indian and other high-growth region OEM customers to be able to offer world-leading technologies, localized engineering support and unparalleled manufacturing productivity. As of December…
• FY2025 10-K: …remain resilient, supported by critical infrastructure needs and hybrid solutions, while marine applications focus on compliance and efficiency. Overall, growth expectations have shifted toward 2026-2027, with near-term conditions characterized by caution and selective investment. Global vehicle fuel efficiency and…
• APTV (APTIV PLC)
• FY2025 10-K: …structure and management reporting support the management of these core product lines: Advanced Safety and User Experience . This segment provides critical technologies and services to enhance vehicle safety, security, comfort and convenience, including intelligent sensors, high-performance compute, advanced software…
• FY2025 10-K: …• Advanced Safety and User Experience -This segment, which includes our Active Safety, User Experience and Smart Vehicle Compute and Software product lines, provides critical technologies and services to enhance vehicle safety, security, comfort and convenience, including intelligent sensors, high-performance compute…
• LEA (LEAR CORP)
• FY2025 10-K: …compete with the seat system suppliers identified above, as well as certain suppliers that specialize in particular components. For additional factors that may impact our Seating segment's business, financial condition, operating results and/or cash flows, see Item 1A, "Risk Factors." E-Systems Segment Our E-Systems…
• FY2025 10-K: …to facilitate these functions. Key components of this portfolio include zonal controllers, body domain control modules, and smart and passive power distribution modules. Our software offerings include embedded control, cybersecurity software and software to control hardware devices. Our customers traditionally have…
• VC (VISTEON CORPORATION)
• FY2025 10-K: …features are evolving with advances in sensors and suppliers must enable the security/safety initiatives of their customers including the development of such new advances. • Advanced driver assistance systems and autonomous driving - The industry continues to advance toward semi-autonomous and autonomous vehicles.…
• FY2025 10-K: …optics, haptic feedback, and light effects. The Company offers a new generation of large, curved, complex multi-display modules with optical performance designed to be competitive with mobile devices. The Company also developed the first bendable glass multi-display cockpit in the automotive industry and is the…
• ADNT (Adient plc)
• FY2025 10-K: …additional information. Customers Adient is a supplier to all of the global OEMs and has longstanding relationships with premier automotive manufacturers, including BMW, Mercedes-Benz Group, Ford Motor Company, General Motors Company, Honda Motor Company, Hyundai Motor Company, Jaguar Land Rover, Kia Corporation,…
• FY2025 10-K: …served by Adient and reflect the financial information that is reviewed by its chief operating decision maker. Refer to Note 17, "Segment Information," of the notes to the consolidated financial statements for additional information on Adient's reportable segments. Factors Affecting Adient's Operating Environment…
• ATMU (Atmus Filtration Technologies Inc.)
• FY2025 10-K: …that each factor poses to us. Risks Related to Our Business Operations • Significant customer concentration among Cummins, PACCAR, and the Traton Group. • The loss of a top OEM relationship or changes in the preferences of Atmus' aftermarket end-users. • Deriving significant earnings from investees that Atmus does…
• FY2025 10-K: …are on-highway and off-highway, representing approximately 58% and 42% of Atmus' net sales in 2025, respectively. Atmus estimates that approximately 86% of Atmus' net sales in 2025 were generated in the aftermarket. To drive these net sales, Atmus has developed a multi-channel path to global markets that ensures…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.