In September 2018, Autoliv, Inc. (NYSE:ALV) released its earnings update. Generally, analysts seem cautiously optimistic, with profits predicted to increase by 34% next year against the past 5-year average growth rate of 2.5%. Currently with trailing-twelve-month earnings of US$427m, we can expect this to reach US$571m by 2020. Below is a brief commentary on the longer term outlook the market has for Autoliv. For those interested in more of an analysis of the company, you can research its fundamentals here.
How is Autoliv going to perform in the near future?
The view from 27 analysts over the next three years is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of ALV’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
From the current net income level of US$427m and the final forecast of US$621m by 2022, the annual rate of growth for ALV’s earnings is 10%. This leads to an EPS of $8.42 in the final year of projections relative to the current EPS of $4.88. With a current profit margin of 4.1%, this movement will result in a margin of 6.5% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Autoliv, there are three key aspects you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Autoliv worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Autoliv is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Autoliv? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.