Autoliv (ALV) Sets Long-Term Profit Margin Target Of 13%
Zacks Investment Research | Nov 19, 2019 09:15PM ET
Autoliv, Inc. (NYSE:ALV) recently rolled out the latest financial plans and targets, and briefly outlined its growth opportunities and innovation roadmaps for the next few quarters. Post the announcement, shares of Autoliv were down 2%.
Though global car production has been slumping for quite some time due to dismal demand, Autoliv has registered strong order intake till October, 2019. This global leader in automotive safety systems is also focused on rebuilding its operations throughout the entire value chain for state-of-the-art digitalization and automation.
The company expects its sales to grow organically by 3%-4% more per year on an average than light vehicle production growth over a 3-5-year period. It is also aimed at achieving an adjusted operating margin of around 12% and maintains its leverage ratio (debt/EBITDA) target of around 1X, in the 0.5X-1.5X band over the same timeframe.
Autoliv anticipates to benefit from cost-reduction initiatives and lower raw-material costs in 2020. The company will likely grow organically, backed by solid market-share gains. Also, it is expected to witness stabilization in light-vehicle production. Nevertheless, Autoliv might be plagued with a few headwinds next year, including lackluster inflator replacement sales, and higher depreciation and amortization.
Autoliv aims to grow at least in line with the market over the long term (beyond 5 years). The company is focused on achieving an adjusted operating margin of roughly 13%, boosting its earnings capacity.
Other Stocks to Consider
Currently, Autoliv carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the Auto-Tires-Trucks sector are Spartan Motors, Inc. (NASDAQ:SPAR) , SPX Corporation (NYSE:SPXC) and BRP Inc. (NASDAQ:DOOO) , each carrying a Zacks Rank #2 (Buy). You can see Original post
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