Autoliv shares surge on record cash flow, earnings beat
Swedish automotive safety supplier delivers $3.19 EPS vs $2.09 estimate as $2.5B buyback program accelerates
Autoliv shares extended gains Thursday after the Swedish automotive safety supplier crushed fourth-quarter earnings expectations and reported record operating cash flow, highlighting the company's ability to outperform even as global vehicle production moderates.
The company reported adjusted diluted earnings per share of $3.19, a 5.3% increase from the prior year and 52.8% above analyst estimates of $2.09. Revenue of $2.82 billion surpassed expectations of $2.70 billion, driven by new product launches and content gains per vehicle.
The standout performance came from the company's cash generation. Operating cash flow surged 30% to a record $544 million in the fourth quarter, while full-year operating cash flow reached a record $1.16 billion—marking the first time the company has exceeded $1 billion in operating income.
"Our strong cash generation demonstrates the resilience of our business model and operational excellence in a challenging environment," said Mikael Bratt, Autoliv's chief executive officer, in the earnings announcement.
The company is returning that capital to shareholders aggressively. Autoliv repurchased 1.26 million shares in the fourth quarter as part of its ongoing $2.5 billion authorization, which runs through December 2029. The program targets annual repurchases of $300 million to $500 million, positioning the company as one of the most aggressive buyers among automotive suppliers.
For the full year 2025, Autoliv achieved an adjusted operating margin of 12.0% in the fourth quarter, with organic sales growth of 4.2% outpacing global light vehicle production, which increased just 1.3%. This performance underscores Autoliv's strategy of expanding safety content per vehicle, offsetting broader industry headwinds.
The company's 2026 guidance, however, reflects caution. Autoliv projects approximately zero organic sales growth and an adjusted operating margin of 10.5% to 11.0%, assuming a 1% decline in global light vehicle production. Management cautioned that the first quarter of 2026 will show "considerably weaker" adjusted operating margins compared to the prior year, with improvement expected in subsequent quarters.
Despite the conservative outlook, analysts remain largely bullish. Twelve of 17 analysts rate the stock a buy, with an average price target of $138.72—roughly 10% above current levels—according to MarketBeat data. The stock currently trades at 13.1 times trailing earnings, below its five-year average, suggesting room for multiple expansion if margin targets are met.
Autoliv's performance stands in contrast to broader automotive sector challenges. Global vehicle production faces pressure from slowing economic growth, higher interest rates, and the ongoing transition to electric vehicles. Yet safety systems—airbags, seatbelts, and active safety technologies like radar and cameras—remain mandated regardless of powertrain type, providing Autoliv with structural tailwinds.
The company's strong balance sheet and cash generation give it flexibility to invest in next-generation safety technologies while returning capital to shareholders. With the buyback program delivering immediate earnings accretion and operating margins approaching double-digits, investors are focusing on Autoliv's ability to maintain outperformance in a cyclical industry.