Autoliv Plummets 15% in a Year: Here's Why the Stock is a Sell

Core Viewpoint - Autoliv (ALV) shares have underperformed significantly, declining 15.2% over the past year, contrasting with the Zacks Auto, Tires and Trucks sector's growth of 9.7% and the Zacks Automotive – Original Equipment industry's decline of 2% [1] Group 1: Performance and Market Conditions - Global light vehicle production (LVP) is projected to decline by approximately 0.5% in 2025, with notable reductions expected in North America and Europe due to inventory corrections [4] - An unfavorable shift in the LVP mix, particularly in China, is leading to a decrease in demand for ALV's higher-value products as domestic manufacturers focus on lower-content-per-vehicle models [5] - Macroeconomic uncertainties and geopolitical tensions, including tariffs and trade restrictions, are likely to disrupt supply chains and increase raw material costs, negatively impacting demand in key markets like China and Europe [6] Group 2: Company Guidance and Earnings Estimates - Autoliv anticipates organic sales growth of around 2% in 2025, an increase from the 0.4% reported in 2024, with adjusted operating margins expected to range from 10% to 10.5% [8] - The Zacks Consensus Estimate for Autoliv's first-quarter 2025 EPS is $1.87, reflecting an 8.8$2.27 [9] - The consensus estimates for Autoliv's EPS for 2025 and 2026 have also declined by 3.9% and 5.2%, now pegged at $9.70 and$11.01, respectively [9] Group 3: Recent Performance and Investment Outlook - Autoliv has beaten the Zacks Consensus Estimate for earnings in two of the last four quarters, with an average negative surprise of 2.68% [10] - Given the ongoing market challenges and downward-trending EPS estimates, the near-term prospects for ALV appear bleak, leading to a Zacks Rank of 4 (Sell) [11]