Based on Autoliv, Inc.’s (NYSE:ALV) earnings update in December 2018, it seems that analyst forecasts are substantially optimistic, with earnings expected to grow by a high double-digit of 65% in the upcoming year, against the past 5-year average growth rate of 2.6%. Presently, with latest-twelve-month earnings at US$376m, we should see this growing to US$620m by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Autoliv in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
What can we expect from Autoliv in the longer term?
Longer term expectations from the 23 analysts covering ALV’s stock is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To get an idea of the overall earnings growth trend for ALV, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
This results in an annual growth rate of 18% based on the most recent earnings level of US$376m to the final forecast of US$803m by 2022. This leads to an EPS of $9.05 in the final year of projections relative to the current EPS of $4.32. With a current profit margin of 4.3%, this movement will result in a margin of 8.1% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Autoliv, I’ve put together three fundamental factors you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Autoliv worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Autoliv is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Autoliv? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.