Autoliv Inc. (ALV) is hitting new 52-week highs but the stock isn’t altogether expensive. It is trading at just 12.4x forward earnings which makes it a value stock and puts it well below the average of the S&P 500 .
Why is Autoliv so hot?
Autoliv manufactures safety features for cars including seat belts and air bags. The company has 80 plants in 29 countries. Its customers are every major car manufacturer in the world.
Car sales have recently rebounded. In the United States, sales rose 7.5% in March.
Chinese auto sales have been on fire as the Chinese economy has quickly rebounded. Sales rose 76% in the first quarter of 2010 compared with the first quarter last year.
Monthly auto sales in China have now surpassed those in the United States.
Given this kind of auto sales data, it’s not surprising that on Mar 22, Autoliv raised first quarter sales guidance on better than expected sales in North America and Asia.
First quarter organic sales are expected to grow by about 65% over the first quarter of 2009 up from an increase of 50% it forecast at the beginning of the quarter.
Operating margins are forecast to improve at least 11%, up from 8.5% it saw at the beginning of the quarter.
Analysts Have Been Raising Estimates
There are currently 7 strong buys on Autoliv out of 12 covering analysts with one analyst raising from a hold to a strong buy in just the last 30 days. Out of the 12 analysts, 2 also rate ALV a strong sell.
Estimates are jumping ahead of the company’s scheduled first quarter earnings report on Apr 27.
The first quarter Zacks Consensus Estimate has jumped 40% to $1.33 per share in the last month as 5 estimates have moved higher in that time period.
9 estimates have moved higher for 2010, and 1 moved lower, in the past month as the 2010 Zacks Consensus rose 21% to $4.41 from $3.65 per share.
Autoliv is a Zacks #1 Rank (strong buy) stock.
5-Year Chart Tells the Tale of the Recovery
Given the massive stock market rebound since the Mar 2009, it’s not surprising that Autoliv has moved higher.
As you can see from the 5-year chart, Autoliv has reclaimed much of its big sell-off.
Still, the company has attractive valuations. It has a price-to-book of just 1.9, which is well within the parameters of a value stock.
Autoliv also can claim a solid 5-year average return on equity (ROE) of 10.3%.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service.
