Autoliv (ALV) Q3 Earnings Breeze Past Estimates, Down Y/Y

Autoliv, Inc. ALV reported adjusted earnings of $1.47 per share in the third-quarter 2017, beating the Zacks Consensus Estimate of $1.33. However, the bottom line came in 9.8% lower than the prior-year quarter figure.

During the quarter, Autoliv reported net sales of $2.5 billion, reflecting an increase of 1.6% year over year. Also, the top line came in slightly higher than the Zacks Consensus Estimate of $2.49 billion.

Operating income decreased 17% to $158.7 million from $191.1 million in the year-ago quarter. Adjusted operating margin was 7.9% in the reported quarter, lower than the prior-year quarter figure of 8.1%.

Segment Results

Sales at the Passive Safety segment increased 2.8% year over year to $1.95 billion in the reported quarter. Excluding negative currency translation effects, organic sales increased 1.3%. The segment’s operating income declined 15.3% to $161.7 million year over year.

Sales at the Electronics segment declined 1.8% year over year to $566.9 million. Operating income from the division increased 68% to $8.4 million.

Financial Position

Autoliv had cash and cash equivalents of $958.3 million as of Sep 30, 2017, lower than $1.82 billion reported as of Sep 30, 2016. Long-term debt was $1.32 billion as of Sep 30, 2017, down from $1.47 billion as of Sep 30, 2016.

In third-quarter 2017, the company’s cash flow from operations declined to $218 million from the year-ago figure of $271 million. Net capital expenditures increased to $142 million from the year-ago recorded figure of $118 million.

Dividend

On Aug 14, 2017, Autoliv announced quarterly dividend of 60 cents per share for the fourth quarter of 2017, unchanged sequentially. The dividend will be paid on Dec 7, to shareholders on record as of Nov 22, 2017.

Guidance

In fourth-quarter 2017, Autoliv expects organic sales to remain flat year over. Currency translations are expected to have a positive impact of around 4% on sales, leading to consolidated sales growth of 4%. The adjusted operating margin in the fourth quarter is likely to be more than 9%.

Autoliv expects full-year 2017 organic sales to be more than 1%, lower than the previous guidance of around 2%. The recent acquisitions and currency translation are expected have a positive impact of around 1.5% on sales. Based on these factors, consolidated sales are expected to increase around 3%.

Tax rate for full-year 2017 is likely to be around 30%, unchanged from the prior-quarter expectation. Operating cash flows are anticipated to be about or more than $0.8 billion, excluding any discrete items and antitrust related matters, while capital expenditure for supporting the company’s growth plans are still projected to be in the range of 5-6% of sales.

Currently, Autoliv carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the auto space are PACCAR Inc PCAR, Fox Factory Holding Corp. FOXF and Daimler AG DDAIF.

While PACCAR sports a Zacks Rank #1 (Strong Buy), both Fox Factory Holding and Daimler carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

PACCAR, Fox Factory Holding and Daimler have a long-term expected earnings growth rate of 10%, 14.2%, and 2.8%, respectively.

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