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Why Is Autoliv (ALV) Down 17.2% Since Last Earnings Report?

Zacks Equity Research
Atlantic Capital Bancshares (ACBI) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

A month has gone by since the last earnings report for Autoliv (ALV). Shares have lost about 17.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Autoliv due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Autoliv Earnings Miss Estimates in Q1, Decline Y/Y

Autolivreported adjusted earnings of $1.20 per share in first-quarter 2019, missing the Zacks Consensus Estimate of $1.57. Moreover, the bottom line declined from the prior-year quarter figure of $1.82.

During the quarter under review, the company reported net sales of $2.17 billion, reflecting a 3% year-over-year decline. The figure was in line with the Zacks Consensus Estimate. Quarterly organic sales grew 1.8%, which outpaced global light-vehicle production, majorly driven by the Americas and China.

Operating income from continuing operations declined 29% year over year to $173 million. Adjusted operating margin from continuing operations was 7.7% in the reported quarter, lower than the prior-year quarter figure of 10.9%.

Financial Position

Autoliv had cash and cash equivalents of $437 million as of Mar 31, 2019, lower than $794 million reported as of Mar 31, 2018. Long-term debt was $1.6 billion as of Mar 31, 2019, witnessing an increase from $1.3 billion as of Mar 31, 2018.

At the end of first-quarter 2019, the company’s operating cash flow increased to $154 million from the year-ago figure of $81 million. Net capital expenditure decreased to $108 million from the year-ago figure of $139 million.

Guidance

For 2019, Autoliv reiterated organic sales growth projection of around 5%. Consolidated sales growth is expected to be approximately 3%. Further, adjusted operating margin is projected to be around 10.5%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -7.17% due to these changes.

VGM Scores

At this time, Autoliv has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Autoliv has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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