On Dec 30, 2014, shares of Autoliv, Inc. (ALV) reached a new 52-week high of $108.51, before eventually closing at $107.09. The closing price represents a year-to-date return of 21.7%.
Share Price Drivers
Like most companies in the automobile sector, Autoliv’s share price is also getting a boost from the declining oil and gas prices.
Moreover, Autoliv actively pursues capital deployment strategies to boost shareholder value. As a result, Autoliv spent $429 million to repurchase close to 4.3 million shares in the first nine months of 2014. The company also increases its quarterly dividend on a regular basis. These strategies help maintain the company’s efficient capital structure.
Additionally, Autoliv regularly launches innovative products to boost sales. The company has received many awards for the same. In Dec 2014, the company announced that it will be supplying replacement airbag inflators to Honda Motor Co., Ltd. (HMC) to meet the expanded supply of inflators needed by the automaker. In order to satisfy the increasing demand, Autoliv will expand the inflator production capacity in its existing manufacturing facilities and deliveries are expected to begin after about six months.
From Jan 1, 2015, Autoliv will change its reportable segments to Passive Safety and Electronics. The change in operating structure is expected to facilitate growth and help the company effectively manage its operations. It should also facilitate the implementation of Autoliv’s business strategies.
In addition, Autoliv expects organic sales growth of about 2% and projects operating margin to be around 9.5% in the fourth quarter of 2014, excluding capacity alignments and antitrust investigation costs. Autoliv also projects operating margin, excluding capacity alignments and antitrust investigation costs, of around 9% for full-year 2014.
Currently, Autoliv carries a Zacks Rank #3 (Hold).
Better-ranked automobile stocks worth considering include Magna International Inc. (MGA) and Meritor, Inc. (MTOR). While Meritor sports a Zacks Rank #1 (Strong Buy), Magna International carries a Zacks Rank #2 (Buy).
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