Autoliv, Inc. ALV reported adjusted earnings of $2.22 per share in second-quarter 2018, beating the Zacks Consensus Estimate of $1.88. Moreover, the bottom line improved from the prior-year quarter’s $1.50.
During the quarter under review, Autoliv reported net sales of $2.21 billion, reflecting an increase of 11.5% year over year. The top line missed the Zacks Consensus Estimate of $2.3 billion. Quarterly organic sales grew 7.3%, with major geographic organic growth across China, India, ASEAN and South America.
Operating income from continuing operations gained 4.2% to $229 million. However, adjusted operating margin from continuing operations was 10.4% in the reported quarter, lower than the prior-year quarter’s figure of 11.1%.
Autoliv, Inc. Price, Consensus and EPS Surprise
On Jun 29, 2018, Autoliv completed the spin-off of its Electronics business into Veoneer, Inc. After the completion of the spin-off, the company is focused on occupant safety products. The total cost of separation in 2017 and 2018, including tax effects, amounted to roughly $105 million, against the company’s expectation of $150 million.
Financial Position
Autoliv had cash and cash equivalents of $507.5 million as of Jun 30, 2018, lower than $922.5 million reported as of Jun 30, 2017. Long-term debt was $1.68 billion as of Jun 30, 2018, witnessing an increase from $1.31 billion as of Jun 30, 2017.
In the first half of 2018, the company’s cash flow from operations was $63 million compared with the year-ago figure of $329 million. Business segment separating costs and increased operating working capital has resulted in this decline. Net capital expenditure increased to $304 million from the year-ago figure of $260 million.
Guidance
For 2018, Autoliv anticipates a consolidated sales increase of around 10%, with organic sales growth for continuing operations to be around 8% combined with a positive currency translation of approximately 2%. Further, the projected operating cash flow for continuing operations is expected to be on a similar level to 2017, which was $870 million.
Zacks Rank & Other Key Picks
Autoliv currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the auto space are Fox Factory Holding Corporation FOXF, AB Volvo VLVLY and Oshkosh Corporation OSK, each carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Fox Factory has an expected long-term growth rate of 15.8%. Over a year, shares of the company have gained 27.9%.
Volvo has an expected long-term growth rate of 15%. Over a year, shares of the company have gained 2.4%.
Oshkosh has an expected long-term growth rate of 18.3%. Shares of the company have risen 9.3% in the past year.
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