Investment Thesis
Autoliv demonstrates profitable operations with 4.1% revenue growth, but faces critical cash generation problems: operating cash flow is negative at -$76M despite $141M net income, and free cash flow is severely negative at -$161M. Combined with deteriorating liquidity (1.08x current ratio, 0.82x quick ratio) and flat earnings growth, the company shows signs of working capital stress and potential liquidity constraints that outweigh operational profitability.
Strengths
- Positive net income of $141M demonstrates core operational profitability
- Strong interest coverage ratio of 9.1x indicates solid ability to service debt obligations
- Moderate leverage at 0.65x debt-to-equity provides some balance sheet cushion
Risks
- Critical cash flow mismatch: -$76M operating cash flow against +$141M net income signals severe working capital deterioration or quality of earnings concerns
- Severely negative free cash flow at -$161M with 5.8% FCF margin indicates unsustainable capital structure and potential refinancing risk
- Tight liquidity with current ratio of 1.08x and quick ratio of 0.82x below safe thresholds, leaving minimal cushion for operational disruptions
- Flat net income growth (0% YoY) combined with modest revenue growth (4.1%) indicates margin compression and operational efficiency deterioration
- Low returns on equity (5.4%) and assets (1.7%) suggest capital is not being deployed productively
Key Metrics to Watch
- Operating cash flow trend and working capital management
- Free cash flow sustainability and cash burn rate
- Liquidity position: cash balance, availability of credit facilities, debt covenants
- Gross and operating margin trends for signs of pricing power or cost inflation
- Capital expenditure requirements relative to cash generation capacity
Financial Metrics
Revenue
2.8B
Net Income
141.0M
EPS (Diluted)
$1.88
Free Cash Flow
-161.0M
Total Assets
8.5B
Cash
342.0M
Profitability Ratios
Gross Margin
19.1%
Operating Margin
8.6%
Net Margin
5.1%
ROE
5.4%
ROA
1.7%
FCF Margin
-5.8%
Balance Sheet & Liquidity
Current Ratio
1.08x
Quick Ratio
0.82x
Debt/Equity
0.65x
Debt/Assets
0.0%
Interest Coverage
9.12x
Long-term Debt
1.7B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-06T10:57:26.650577 |
Data as of: 2026-03-31 |
Powered by Claude AI