NEW YORK (TheStreet) -- Shares of Autoliv Inc. (ALV) are down by 1.71% to $121.57 at the start of trading on Tuesday morning. The stock was downgraded to "sector weight" from "overweight" at Keybanc today.
The firm said it lowered its rating on the developer, manufacturer, and supplier of automotive safety systems based on a valuation call.
"Material EPS upside in 2015 and 2016 from: a) the Takata recall; and b) capital deployment, beyond what the stock price already reflects appears unlikely," the firm said in an analyst note.
"The 2017 EPS outlook is somewhat uncertain with the Takata recall ending and lack of visibility on sustainable airbag share gains; and valuation is well above historical levels and appears to have peaked recently," Keybanc added.
Separately, TheStreet Ratings team rates AUTOLIV INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate AUTOLIV INC (ALV) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.51, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.40, which illustrates the ability to avoid short-term cash problems.
- AUTOLIV INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, AUTOLIV INC increased its bottom line by earning $5.08 versus $5.06 in the prior year. This year, the market expects an improvement in earnings ($6.43 versus $5.08).
- ALV, with its decline in revenue, slightly underperformed the industry average of 3.9%. Since the same quarter one year prior, revenues slightly dropped by 5.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- The gross profit margin for AUTOLIV INC is rather low; currently it is at 22.69%. Regardless of ALV's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.64% trails the industry average.
- You can view the full analysis from the report here: ALV Ratings Report