Automotive safety systems provider Autoliv (NYSE: ALV) reported revenue ahead of Wall Street’s expectations in Q1 CY2026, with sales up 6.8% year on year to $2.75 billion. Its non-GAAP profit of $2.05 per share was 11.4% above analysts’ consensus estimates.

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Company Overview

With products estimated to save over 30,000 lives annually in traffic accidents worldwide, Autoliv (NYSE: ALV) develops and manufactures passive safety systems for vehicles, including airbags, seatbelts, and steering wheels that protect occupants during crashes.

Revenue Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Autoliv grew its sales at a mediocre 7% compounded annual growth rate. This was below our standard for the industrials sector and is a rough starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Autoliv’s recent performance shows its demand has slowed as its annualized revenue growth of 1.8% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs. We also note many other Automobile Manufacturing businesses have faced declining sales because of cyclical headwinds. While Autoliv grew slower than we’d like, it did do better than its peers.

This quarter, Autoliv reported year-on-year revenue growth of 6.8%, and its $2.75 billion of revenue exceeded Wall Street’s estimates by 4.8%.

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. This projection doesn't excite us and suggests its newer products and services will not lead to better top-line performance yet.

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Operating Margin

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

Autoliv has done a decent job managing its cost base over the last five years. The company has produced an average operating margin of 8.3%, higher than the broader industrials sector.

Looking at the trend in its profitability, Autoliv’s operating margin rose by 2.7 percentage points over the last five years, as its sales growth gave it operating leverage. Its expansion was impressive, especially when considering the cycle turned in the wrong direction and most of its Automobile Manufacturing peers observed plummeting revenue and margins.

This quarter, Autoliv generated an operating margin profit margin of 8.6%, down 1.2 percentage points year on year. Since Autoliv’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Autoliv’s EPS grew at 19.2% compounded annual growth rate over the last five years, higher than its 7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into the nuances of Autoliv’s earnings can give us a better understanding of its performance. As we mentioned earlier, Autoliv’s operating margin declined this quarter but expanded by 2.7 percentage points over the last five years. Its share count also shrank by 14.3%, and these factors together are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Autoliv, its two-year annual EPS growth of 4.7% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q1, Autoliv reported adjusted EPS of $2.05, down from $2.15 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. We also like to analyze expected EPS growth based on Wall Street analysts’ consensus projections, but there is insufficient data.

Key Takeaways from Autoliv’s Q1 Results

We were impressed by how significantly Autoliv blew past analysts’ EBITDA expectations this quarter. We were also excited its adjusted operating income outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this quarter featured some important positives. The stock traded up 11.1% to $123.73 immediately after reporting.

Autoliv may have had a good quarter, but does that mean you should invest right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).