By Rob Otman
Autoliv (NYSE: ALV) is a large cap company that operates within the auto components industry. Its market cap is $13 billion today and the total one-year return is 55.13% for shareholders.
Autoliv stock is beating the market, and it reports earnings soon. But does that make it a good buy today? To answer this question we’ve turned to the Investment U Stock Grader. Our research team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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✗ Earnings-per-Share (EPS) Growth: Autoliv reported a recent EPS growth rate of -56.89%. That’s below the auto components industry average of 5.79%. That’s not a good sign. We like to see companies that have higher earnings growth.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the auto components industry is 21.45. And Autoliv’s ratio comes in at 15.51. It’s trading at a better value than many of its competitors.
✓ Debt-to-Equity: The debt-to-equity ratio for Autoliv stock is 32.17%. That’s below the auto components industry average of 62.55%. That’s a good sign. Autoliv’s debt levels are not out of control.
✓ Free Cash Flow per Share Growth: Autoliv has increased its FCF per share over the last year relative to its competitors. That’s good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth.
✗ Profit Margins: The profit margin of Autoliv comes in at 2.29% today. And generally, the higher, the better. We also like to see this ratio above competitors. Autoliv’s profit margin is below the auto components average of 8.36%. So that’s a negative indicator for investors.
✗ Return on Equity: Return on equity tells us how much profit a company produces with the money shareholders invest. The ROE for Autoliv is 11.08% and that’s below the industry average ROE of 17.85%.
Autoliv stock passes three of our six key metrics today. That’s why our Investment U Stock Grader gives it a Hold.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.
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Source:: Investment You
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