Why Autoliv Stock Jumped Today

What happened

Shares of Autoliv (ALV 10.20%), a global provider of automotive safety systems, jumped as much as 11.3% Friday morning after the company announced record quarterly sales with its second-quarter report. The stock was still up by 11% on the news as of 2:23 p.m. ET, at its highest level in almost 18 months. 

So what

Autoliv reported net year-over-year sales growth of 27% in the second quarter thanks to increases in volume and improved pricing. The quarter set records for sales, operating cash flow, and adjusted operating income since the company spun off its Veoneer unit in 2018. Autoliv spun off Veoneer to separate its electronics segment, which was acquired by Qualcomm and a private equity partner three years later. 

Autoliv’s earnings per share more than doubled year over year when adjusted to exclude nonrecurring impacts from capacity alignment, antitrust related matters, and a litigation settlement.

Now what

Maybe most notable for investors — and what helped drive shares higher today — was the pivot to strong operating cash flow compared to last year. In the first six months of 2023, Autoliv has generated operating cash flow of $334 million, compared to just $19 million in the prior-year period. That has helped the company lower its debt load as well as increase its dividend payout to shareholders. 

The results also led the company to reiterate its 2023 estimates for total operating cash flow of around $900 million and organic sales growth of about 15%.

Those predictions are based on the current thriving automotive sales environment, though. Auto sales can be very cyclical, so investors in Autoliv should be sure to think about the investment through both up and down business cycles. 

Howard Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Qualcomm. The Motley Fool has a disclosure policy.

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