Episode
Autoliv Stock (ALV): EPS ’Crashed’ 38% — So Why We’re BUYING It (Q2 2026)
- Published
- Jul 18, 2026
- Duration seconds
- 871
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Summary
Autoliv (ALV) Q2 2026 — Autoliv (ALV) reported Q2 2026 (Jul 17): net sales $2,803M (+3.3% reported, +1.0% organic - 1.3pp above a global light-vehicle-production decline of 0.3%); adjusted operating margin 9.6% (+0.4pp YoY); adjusted diluted EPS $2.43 (+10% YoY), a hair below the ~$2.46 consensus (a small miss); GAAP diluted EPS $1.35 (-38% YoY) - driven almost entirely by a one-time $90M charge (of $142M total) to discontinue manufacturing in Turkey (~2,200 jobs, closure by H1 2028, ~$40M/yr savings from 2027). The stock fell ~3.8% to ~$120. Under the hood the quarter was strong: free operating cash flow more than doubled to $340M (operating cash flow $434M, +57%); Autoliv repurchased $200M of stock (1.65M shares) and raised the dividend 24% to $0.87/quarter; net debt just $1,695M, leverage a low 1.2x. China was a highlight: sales to domestic Chinese OEMs +44% organic, now 55% of China sales (vs ~40% a year ago), with new deals signed with Great Wall Motor and XPENG; India +36%. Tariffs: >80% recovered from customers, net impact only ~$7M. FY2026 guidance: ~0% organic growth (vs LVP ~-2.5%), adjusted operating margin ~10.5-11%, operating cash flow ~$1.2B. Our owner-earnings DCF (normalized base ~$700M, 9/10/11% discount) lands ~$137 (probability-weighted at a 10% base) vs ~$120 today. Wall Street: Hold consensus (16 buy / 20 hold / 1 sell), avg target ~$129. Our call: BUY, 4/5 - the world's #1 passive-safety supplier, too cheap for its margin trajectory and ~7% total shareholder yield, mispriced for a one-time charge. Autoliv is the world's largest maker of passive safety - the airbags, seatbelts and steering wheels in cars - with about $11B in annual sales. In Q2 2026 the headline looked like a miss: GAAP diluted EPS fell 38% to $1.35 and adjusted EPS of $2.43 cam…