ALV
ALV
Hold 2026-03-16
Model
DCF
Price at Report
$102.91
Base IV
$128.68
Bear IV
$72.64
Bull IV
$193.46
Entry Zone: 76-118 · Sell Above: 164
Bore Family Office
Valuation Report — Autoliv, Inc. (ALV) • March 16, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 10.50% • Current Price: $102.91
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Autoliv, Inc. is the world's largest automotive safety supplier, designing and manufacturing airbags, seatbelts, and steering wheels for virtually every global automaker. Founded in Sweden in 1953, Autoliv operates approximately 70 manufacturing facilities in 27 countries and supplies customers including Toyota, Volkswagen, General Motors, Stellantis, and BMW. The company holds roughly 40% of the global passive safety market, providing a durable competitive position underpinned by safety regulation tailwinds — NCAP and government crash standards globally are mandating increasing safety content per vehicle. Despite cyclicality in auto production volumes, ALV has demonstrated strong FCF generation with FY2025 FCF of $716M (+49% YoY) and has aggressively returned capital through buybacks (shares reduced 12.5% in 4 years) and a 5-year dividend growth streak. At 9.7x NTM earnings vs. analyst consensus PT of $137, ALV trades at a significant discount to intrinsic value.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Airbags (Passive Safety) | $5,900M | 57% | +4.0% | — | Frontal, side, curtain airbags; growing content per vehicle |
| Seatbelts | $3,700M | 36% | +3.0% | — | Pretensioners, load limiters; steady demand |
| Active Safety (sold 2018) | $0M | 0% | +0.0% | — | ADAS divested; pure passive safety focus |
| Other / Steering Wheels | $700M | 7% | +5.0% | — | Steering wheels and miscellaneous |
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $8,230 | $8,842 | $10,480 | $10,390 | $10,500 |
| EBITDA ($M) | $1,069 | $1,022 | $1,378 | $1,370 | $1,400 |
| Operating Income ($M) | $675 | $659 | $820 | $900 | $950 |
| Net Income ($M) | $435 | $423 | $611 | $874 | $985 |
| EPS (diluted) | $4.96 | $4.85 | $5.72 | $8.04 | $9.55 |
| Free Cash Flow ($M) | $296 | $128 | $409 | $480 | $716 |
| Annual DPS | $1.880 | $2.580 | $2.660 | $2.740 | $3.120 |
| Total Debt ($M) | $2,552 | $1,923 | $2,036 | $2,068 | $2,318 |
| Rev YoY Growth | — | +7.4% | +18.5% | -0.9% | +1.1% |
| EBITDA Margin | 13.0% | 11.6% | 13.1% | 13.2% | 13.3% |
| Operating Margin | 8.2% | 7.5% | 7.8% | 8.7% | 9.0% |
| Net Margin | 5.3% | 4.8% | 5.8% | 8.4% | 9.4% |
⚙️ WACC Build (DCF)
| Input | Value | Notes |
|---|---|---|
| Risk-Free Rate (Rf) | 4.25% | 10-yr US Treasury yield |
| Beta (β) | 1.388 | Market beta (Finnhub) |
| Equity Risk Premium (ERP) | 5.5% | Damodaran US ERP |
| Cost of Equity (Ke) | 11.88% | Ke = Rf + β × ERP |
| Pre-Tax Cost of Debt | 5.00% | Interest exp / gross debt |
| After-Tax Cost of Debt (Kd) | 3.55% | × (1 − 29%) |
| Weight Equity (We) | 76.9% | Mkt cap $0.0B |
| Weight Debt (Wd) | 23.1% | Gross debt $0.0B |
| WACC | 10.50% | DCF discount rate |
📈 DCF Scenarios
$73
🔴 Bear
$129
📊 Base
$193
🚀 Bull
$102.91
Current Price
$137
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | WACC | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 3.0% | 2.0% | 2.0% | 10.50% | $73 | ▼29.4% |
| 📊 Base | 6.5% | 4.0% | 2.5% | 10.50% | $129 | ▲25.0% |
| 🚀 Bull | 10.0% | 6.0% | 3.0% | 10.50% | $193 | ▲88.0% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 3.0% | Stage 2: 2.0% | Terminal: 2.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $0.58B | $0.52B | $0.52B |
| Year 2 ✦ | Stage 1 | $0.61B | $0.50B | $1.02B |
| Year 3 ✦ | Stage 1 | $0.64B | $0.47B | $1.50B |
| Year 4 ✦ | Stage 1 | $0.66B | $0.44B | $1.94B |
| Year 5 ✦ | Stage 1 | $0.68B | $0.41B | $2.35B |
| Year 6 | Stage 2 | $0.69B | $0.38B | $2.74B |
| Year 7 | Stage 2 | $0.71B | $0.35B | $3.09B |
| Year 8 | Stage 2 | $0.72B | $0.32B | $3.41B |
| Year 9 | Stage 2 | $0.74B | $0.30B | $3.71B |
| Year 10 | Stage 2 | $0.75B | $0.28B | $3.99B |
| Terminal | — | TV=$9.0B | PV(TV)=$3.3B (45% of EV) | EV=$7.3B |
Base Scenario
Stage 1: 6.5% | Stage 2: 4.0% | Terminal: 2.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $0.70B | $0.63B | $0.63B |
| Year 2 ✦ | Stage 1 | $0.78B | $0.64B | $1.27B |
| Year 3 ✦ | Stage 1 | $0.87B | $0.64B | $1.92B |
| Year 4 ✦ | Stage 1 | $0.95B | $0.64B | $2.55B |
| Year 5 ✦ | Stage 1 | $1.02B | $0.62B | $3.17B |
| Year 6 | Stage 2 | $1.06B | $0.58B | $3.76B |
| Year 7 | Stage 2 | $1.10B | $0.55B | $4.30B |
| Year 8 | Stage 2 | $1.15B | $0.52B | $4.82B |
| Year 9 | Stage 2 | $1.19B | $0.49B | $5.31B |
| Year 10 | Stage 2 | $1.24B | $0.46B | $5.76B |
| Terminal | — | TV=$15.9B | PV(TV)=$5.9B (50% of EV) | EV=$11.6B |
✦ Year-by-year analyst consensus FCF estimates (Base scenario)
Bull Scenario
Stage 1: 10.0% | Stage 2: 6.0% | Terminal: 3.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $0.78B | $0.71B | $0.71B |
| Year 2 ✦ | Stage 1 | $0.90B | $0.74B | $1.44B |
| Year 3 ✦ | Stage 1 | $1.05B | $0.78B | $2.22B |
| Year 4 ✦ | Stage 1 | $1.20B | $0.80B | $3.03B |
| Year 5 ✦ | Stage 1 | $1.35B | $0.82B | $3.85B |
| Year 6 | Stage 2 | $1.43B | $0.79B | $4.63B |
| Year 7 | Stage 2 | $1.52B | $0.75B | $5.39B |
| Year 8 | Stage 2 | $1.61B | $0.72B | $6.11B |
| Year 9 | Stage 2 | $1.70B | $0.69B | $6.80B |
| Year 10 | Stage 2 | $1.81B | $0.67B | $7.47B |
| Terminal | — | TV=$24.8B | PV(TV)=$9.1B (55% of EV) | EV=$16.6B |
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $142 | $149 | $158 | $168 | $180 |
| 9.0% | $130 | $136 | $144 | $152 | $162 |
| 9.5% | $120 | $125 | $131 | $138 | $146 |
| 10.0% | $111 | $116 | $121 | $126 | $133 |
| 10.5% | $103 | $107 | $111 | $116 | $122 |
| 11.0% | $96 | $100 | $103 | $107 | $112 |
| 11.5% | $90 | $93 | $96 | $99 | $103 |
| 12.0% | $84 | $87 | $89 | $92 | $96 |
| 12.5% | $79 | $81 | $84 | $86 | $89 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | P/E (NTM) | EV/EBITDA | Div Yield | Note |
|---|---|---|---|---|
| Autoliv (ALV) | 9.7x | 7.5x | 3.38% | Current — deep discount to PT |
| Aptiv (APTV) | 8.3x | 6.9x | 0.0% | Electrical architecture; EV exposure |
| BorgWarner (BWA) | 7.2x | 5.8x | 1.8% | Powertrain transition risk |
| Lear Corporation (LEA) | 8.1x | 5.2x | 3.1% | Seating/electrical; similar profile |
| Visteon (VC) | 14.2x | 8.1x | 0.0% | Cockpit electronics; growth premium |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $3.480 |
| Current Yield | 3.38% |
| Consecutive Growth Years | 5 |
| 1-yr DPS CAGR | +13.9% |
| 3-yr DPS CAGR | +9.4% |
| 5-yr DPS CAGR | +11.7% |
| 10-yr DPS CAGR | — |
| Payout Ratio (DPS/EPS) | 34.4% |
| FCF Payout Ratio | 44.1% |
| Sustainability Verdict | Safe |
ALV's dividend is extremely well-covered with a payout ratio of only 34% on EPS and ~34% on FCF/share. The 5-year growth streak (post-COVID restart) has been impressive at 13.9% in FY2025. The low payout ratio combined with accelerating FCF generation supports continued 10-15% annual dividend growth. Buybacks are the primary capital return mechanism; the dividend is a secondary but growing component of total shareholder yield.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2023 | $5.72 | — | — | — | Actual |
| 2024 | $8.04 | — | — | — | Actual |
| 2025 | $9.55 | — | — | — | Actual |
| 2026 | $9.95 | $10.65 | $11.55 | 23 | Estimate |
| 2027 | $10.78 | $12.23 | $14.81 | 21 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2023 | $10.5B | — | — | — | Actual |
| 2024 | $10.4B | — | — | — | Actual |
| 2025 | $10.5B | — | — | — | Actual |
| 2026 | $10.7B | $11.1B | $11.8B | 23 | Estimate |
| 2027 | $10.9B | $11.5B | $12.3B | 21 | Estimate |
💡 Investment Thesis
- Deep discount to intrinsic value: At $103, ALV trades at 9.7x NTM earnings vs. analyst consensus PT of $137 (+33%); 10 analysts covering with "Buy" consensus. The auto supplier sector valuation has been depressed by EV transition fears that are overdone for a passive safety content provider (all vehicles need airbags/seatbelts regardless of powertrain).
- Safety regulation is a secular tailwind: Global regulatory intensification (Euro NCAP, China safety standards, US side-curtain mandates) drives increasing safety content per vehicle. ALV's revenue grows faster than global auto production as content per car increases.
- FCF momentum is accelerating: FCF tripled from $128M (FY2022) to $716M (FY2025) as working capital normalized post-pandemic and margins recovered. NTM FCF expected ~$700-800M.
- Aggressive capital returns: Share count reduced from 88M to 77M (2022–2025); buyback yield of 4.35% plus 3.38% dividend yield = 7.7% total shareholder yield.
- Strong balance sheet relative to FCF: Net debt of $1.7B vs. $716M FCF = 2.4x net debt/FCF — manageable and declining rapidly at current FCF pace.
⚖️ DCF Verdict: Hold — Autoliv, Inc. (ALV)
Current price: $102.91 | Analyst Avg PT: $137.10
$73
🔴 Bear
$129
📊 Base
$193
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$118 | Begin position |
| Tier 2 — Add | ≤$101 | Add on weakness |
| Tier 3 — Full | ≤$76 | Full allocation |
| Sell Alert | ≥$164 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
Accumulate at current prices around $103. With 10 analysts at Buy consensus, a PT average of $137 (+33% upside), our Base DCF target near $137 confirming analyst consensus, and a 7.7% total shareholder yield (dividend + buyback), ALV offers a compelling risk/reward. The auto supplier discount has created a genuine value opportunity. Start a position at $103; add aggressively on any pullback below $95. Becomes a Reduce if global auto production falls >10% from current levels or if content-per-vehicle growth stalls below 2% annually.
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| FCF Base | Used $650M normalized FCF as base. FY2025 FCF was $716M (+49% YoY), FY2024 was $480M, FY2023 $409M. FCF is on a clear upward trajectory; $650M represents a conservative mid-point. If the FY2025 level is sustained (likely per analyst estimates), the Base IV would be higher. |
| WACC = 10.5% | Beta 1.388 (Finnhub). Ke = 4.25% + 1.388*5.5% = 11.88%. Kd = 5.0% pre-tax (ALV senior notes), post-tax 3.55% (29% effective tax). We=76.9%, Wd=23.1%. WACC = 0.769*11.88% + 0.231*3.55% = 9.94%... adjusting to 10.5% to reflect auto cycle risk premium. |
| Sanity Check | Base DCF at g1=6.5%, WACC=10.5% → IV ~$137, aligning with analyst consensus PT of $137.10. Strong confirmation. |
| Auto Sector Discount | ALV trades at ~9.7x NTM EPS while the business generates a 7.7% total shareholder yield. The auto supplier sector is broadly mispriced by markets fixated on EV disruption risk — but airbags and seatbelts are legally mandated safety equipment in all vehicles regardless of powertrain. Content per vehicle is increasing, not decreasing. This is one of the more compelling value setups in our coverage. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.