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Autoliv, Inc. (ALV) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Autoliv, Inc. (ALV)

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Intrinsic Value (DCF)

Current$129.58
→
Intrinsic$153.16
+18%
$97.48$153.16$258.87
Market implies 16% growth for 5 years
ALV shows 18% potential upside using 20% growth — reasonable if fundamentals hold.
At $130, the market prices in continued high-teens cash flow growth (16%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $97 → Bull $259. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →16%18%20%22%
8%$191$209$228$248
10%$128$140$153$167
12%$93$102$112$122
14%$71$78$86$94

Bull Case

  • Bull case ($259) offers 100% upside at 24% growth, 9% discount
  • 15% margin of safety vs. base case estimate
  • Market-implied growth (16%) ≤ historical CAGR (20%)

Bear Case

  • Bear case ($97) implies 25% downside at 16% growth, 12% discount
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5-Year Free Cash Flow Projection

Year 1$576.00M
Year 2$691.20M
Year 3$829.44M
Year 4$995.33M
Year 5$1.19B
Terminal$17.57B

📐 Model Inputs

Growth Rate20.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$480.00MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is ALV stock undervalued or overvalued?
🟢 UNDERVALUED

ALV trades at $129.58 vs. our DCF-derived intrinsic value of $153.16, implying +22% upside. At a 10.0% WACC and 20.0% projected FCF growth, the market appears to be underpricing the present value of ALV's future cash flows. The bear case ($93.02) still suggests upside, providing margin of safety.

What is ALV's intrinsic value?

Using a 5-year DCF model: Base FCF of $480M, projected at 20.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $1.74B net debt and dividing by 0.08B shares: Bear $93.02 | Base $153.16 | Bull $241.72. Current price $129.58 implies +22% to base case.

How is ALV's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 20.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($14.05B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.