AUTOLIV, INC. (ALV): what the price requires
At today's price, AUTOLIV, INC. (ALV) is priced for -0.6% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/ALV
Headline
| Field | Value |
|---|---|
| Ticker | ALV |
| Company | AUTOLIV, INC. |
| Current price | $121.41/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 3.8% |
| Operating margin today | 9.3% |
| Margin compression implied | -5.5pp |
| Implied growth | -0.6% |
| Multiple paid | 11x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 9.5% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~5.2pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.24σ |
| cohort percentile (of 210 peers) | 19 |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.
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.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.19x | 5 | expensive |
| Earnings | 1.41x | 4 | expensive |
| Relative | 0.68x | 5 | justifies |
| Growth | 1.08x | 4 | expensive |
Families that justify the price: Asset, Relative, Growth
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=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $208.97 | 0.58x | yes | FCF base $0.6B, growth 6% (input: historical growth), terminal g 4.0%, WACC 7.6%, 5yr projection |
| DCF Exit Multiple | Growth | $136.83 | 0.89x | yes | Exit EV/EBITDA: 7.4x / 9.4x / 11.4x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $189.44 | 0.64x | yes | P/E 20x (static sector reference · 2026-04), scenarios: 16.8x / 20.0x / 23.2x (bear / base = reference held flat / bull), EV/EBITDA 13x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | $83.83 | 1.45x | yes | Stage 1: 10% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $102.06 | 1.19x | yes | BV/sh $35.07, ROE (TTM) 26.9%, ke 9.3% |
| Two-Stage Excess Return | Asset | $176.60 | 0.69x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $95.95 | 1.27x | yes | Rev $11.0B, growth 6% (input: historical growth; tapered), Terminal P/S: 0.7x / 0.8x / 1.0x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $111.48 | 1.09x | yes | EPS $9.29, growth 10% (input: historical EPS growth), PEG=1.23 (Fair) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $75.62 | 1.61x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.82B × (1−30%) / WACC 7.6% → EPV (no growth) |
| Residual Income | Asset | $152.89 | 0.79x | yes | BV $35.07 + 5yr PV of (ROE (TTM) 26.9% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $85.62 | 1.42x | yes | √(22.5 × EPS $9.29 × BVPS $35.07) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $178.48 | 0.68x | yes | EBITDA $1.18B × sector EV/EBITDA 13.0x |
| FCF Yield | Earnings | $58.06 | 2.09x | yes | FCF $580.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $229.46 | 0.53x | yes | EPS $9.29 × (8.5 + 2×10.5%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $16.97 | 7.15x | yes | BV $35.07 × (ROIC 3.7% / WACC 7.6%) |
| P/Sales Sector | Relative | $219.51 | 0.55x | yes | Revenue $10.99B × sector P/S 1.5x |
| PEG Fair Value | Relative | $146.12 | 0.83x | yes | EPS $9.29 × (PEG 1.5 × growth 10.5% (input: historical EPS growth)) → PE 15.7x |
| Earnings Yield | Earnings | $100.43 | 1.21x | yes | EPS $9.29 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $1.8b |
| Net debt / NOPAT (after-tax) | 2.48x |
| Net debt / operating income (pre-tax) | 1.74x |
| Interest coverage | 9.8x |
| Share count CAGR (buyback) | -3.8% |
| Burning cash | no |
Bullet Takeaways
- Autoliv is the world's leading maker of airbags and seatbelts, holding a combined market share of around 44% in airbags and steering wheels, which is why a parts supplier earns a return on equity near 27%.
- The business is run for cash returns through the cycle: the share count has fallen about 3.8% a year on buybacks, and the company targets full-year 2026 operating cash flow around $1.2 billion even with car production flat to down.
- The near-term squeeze is input costs: management raised its 2026 raw-material headwind estimate to about $90 million, up from $30 million, mostly from higher oil prices feeding into plastics and textiles, so margin recovery through the year is the variable to watch.
Bull Case
Autoliv's moat is share plus content, and both are durable. It is the leading supplier of automotive passive-safety systems, and the scale shows in the disclosure: the company "holds a leading position in both airbags and steering wheels, with a combined market shares of around 44%". Safety is not a part where carmakers experiment with the cheapest bidder, because a defective airbag is a recall and a liability event, so the qualification barriers are high and the incumbent relationships are sticky. That is how a component supplier earns a return on equity near 27% on a roughly 10% operating margin: not by pricing aggressively, but by holding nearly half a market where reliability and validation matter more than price.
The growth lever is content per vehicle, which decouples Autoliv's revenue from the number of cars built. The company frames the market as "driven by two primary factors: light vehicle production (LVP) and content per vehicle (CPV)", and it sees the CPV side rising as regulations and consumer expectations push more airbags and more advanced restraints into each car, especially in "medium- and low-income markets" where installation rates are still climbing. More inflatable curtains, side airbags, and advanced seatbelts mean Autoliv sells more dollars of safety into the same car. That lets the business grow even when global car production is flat, which is exactly what happened in the first quarter of 2026: organic sales grew 0.8% while global light-vehicle production fell 3.4%, so Autoliv outgrew its end market by more than four points.
The capital discipline turns a steady franchise into a compounding one. Autoliv generates strong free cash flow, near $580 million on a trailing basis, and targets full-year 2026 operating cash flow around $1.2 billion with capital spending below 5% of sales. It returns much of that, shrinking the share count about 3.8% a year through buybacks on top of a dividend. The company is also still finding internal efficiency, having reached its target of 8% labor-minutes-per-unit productivity in 2025, which protects the margin against cost pressure. A near-half-share franchise with a content tailwind, double-digit interest coverage, and a 4%-a-year buyback is the case for owning the safety duopoly rather than the carmakers it sells to.
Bear Case
The competitive pressure on a tier-one auto supplier is constant and structural, even for a leader. Autoliv shares its market with a small number of large rivals capable of matching it on validated safety systems, and the dynamic of the business is annual price-down: carmakers expect their suppliers to lower per-unit prices each year and award new platforms to whoever offers the best combination of price and capability. A supplier with 44% share still has to defend every platform against competitors with the scale to underbid on a specific program, and the constant downward pressure on price is why Autoliv's margin, while healthy for a parts maker, sits in the high single to low double digits rather than higher. Win a major program from a rival and the revenue is locked for years; lose one and it is gone for just as long, and the competition for each is intense.
The deeper exposure is that Autoliv's fortunes ride on a cyclical end market it does not control. The company is explicit that its "business is directly related to LVP in the global market and by our customers, and automotive sales and LVP are the most important drivers for our sales," and it warns that "the cyclical nature of automotive sales and production can adversely affect our business." Content-per-vehicle growth softens the cycle but does not break the link: when car production falls, Autoliv's volumes fall with it, and a high-fixed-cost manufacturing base means a production downturn compresses margins quickly. The first quarter showed the squeeze even with organic growth, as the operating margin slipped to 8.6%, with the company-adjusted figure at 8.9% against 9.9% a year earlier.
Input costs and trade policy are the live near-term risks layered on top. Management raised its 2026 raw-material headwind estimate to about $90 million from $30 million, driven mainly by higher oil prices flowing into the plastics and textiles that go into airbags and belts. On tariffs, the company has recovered most but not all of the cost, more than 80% across the full year, which means the residual is a margin drag and the recovery itself depends on continued customer cooperation. The valuation already prices a cautious outcome: the price requires an operating margin of only about 3.6% against the roughly 10% the company earns, so the market is discounting the franchise heavily for the cyclical and cost risks. The bear case is that those risks are real and recurring, and that a sharp car-production downturn would test both the margin and the buyback that the per-share story depends on, even though the leverage itself is modest.
Valuation
Autoliv is priced as a value-supported franchise, and the inversion shows how little the price actually demands. To justify today's $118.31 (June 27, 2026), the embedded assumption is an operating margin of only about 3.6%, well below the roughly 10% the company earns now, paired with revenue that does not grow. The market is pricing Autoliv as if its margins compress by more than half and its volumes flatten or shrink, which is a cautious view rather than an optimistic one. A company earning nearly three times the margin its price requires is, on the arithmetic, valued conservatively, and the discount reflects the cyclical and cost risks rather than any doubt about the franchise's position.
The methods we use to triangulate mostly land above the price, which is the signature of a value-and-cash-return name rather than a growth bet. The peer-multiple lens lands near $189 on a sector earnings multiple, a perpetual-growth cash-flow read near $211, and a book-value-plus-profitability read near $153, all above the current price. The static earnings-power and free-cash-flow lenses land lower, near $76 and $58, because they assume zero growth and credit nothing for the content tailwind or the franchise durability. The pattern says the same thing the inversion does: the price sits below where most methods value the business, and the gap is the market's discount for the auto cycle. Only if car production falls hard and stays down do the low static methods become the right read.
Solvency leaves comfortable room under the downside. Autoliv carries net debt near $1.75 billion, a modest 1.6 times operating income, with interest covered more than ten times over, so debt service is a small claim on the cash flow. That is a conservative balance sheet for a cyclical supplier, and it is what lets the company keep buying back about 3.8% of its shares a year and target $1.2 billion of operating cash flow even in a soft production year. The balance sheet is not the risk here; the cycle is. The decisive judgment for the buyer is whether global car production and Autoliv's content-per-vehicle growth hold up well enough to keep the margin near where it is, because the price has already taken a cautious view, and the methods that value the demonstrated franchise sit above the quote.
Catalysts
Autoliv's first quarter of 2026 was a beat on the top line and a slip on margin. Net sales rose 6.8% to $2,753 million, with organic growth of 0.8% outpacing a 3.4% decline in global light-vehicle production, so the company again grew faster than its end market. The margin moved the other way: operating margin came in at 8.6%, with the company-adjusted figure at 8.9% versus 9.9% a year earlier, pressured by input costs.
The full-year setup is steady but cost-aware. Autoliv maintained 2026 guidance for around 0% organic sales growth, an adjusted operating margin of about 10.5% to 11%, operating cash flow near $1.2 billion, and capital spending below 5% of sales, assuming roughly a 1% decline in global production. The two swing factors are explicit: management raised the raw-material headwind estimate to about $90 million from $30 million on higher oil prices, and noted it has recovered more than 80% of tariff costs across the year. The company expects margin to improve through the remaining quarters, so the next prints are the test of whether that recovery materializes against the raised cost headwind, which is what stands between the current run-rate and the guided full-year margin.
Peer Cohorts (Per Segment, With Filing Citations)
Automotive Safety Systems (reported)
- BWA (BORGWARNER INC)
- (no filing in the citation store)
- PHIN (PHINIA INC.)
- (no filing in the citation store)
- GTX (Garrett Motion Inc.)
- (no filing in the citation store)
- APTV (APTIV PLC)
- (no filing in the citation store)
- LEA (LEAR CORP)
- (no filing in the citation store)
- VC (VISTEON CORPORATION)
- (no filing in the citation store)
- ADNT (Adient plc)
- (no filing in the citation store)
- ATMU (Atmus Filtration Technologies Inc.)
- (no filing in the citation store)
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.
- 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.
Sources
company FY2025 10-K · Q1 FY2026 earnings call · Q1 FY2026 earnings release