Chasing Value: Autoliv - a great value that I'm not buying

Posted Jun 5th 2007 2:30PM by Sheldon Liber
Filed under: Chasing Value™

Sometimes you find a great company at a great price and when you dig deeper you find you have to pass on it. Too bad, because the metrics on Autoliv Inc. (NYSE: ALV) are pretty fantastic. It is the world's #1 producer of car safety equipment, with 80 production facilities in 28 countries around the world and includes 20 test tracks. I like the segment of the automobile market the company is positioned in and feel auto safety will continue to be an expanding opportunity. Here are the numbers that attracted me to Autoliv:

Price-to-earnings P/E: 12.52 (TTM)
Price-to-sales P/S: 0.78 (TTM)
Price-to-book P/B: 1.92 (TTM)
Price-to-earnings P/CF: 6.82 (TTM)

These are great numbers, but there is more:

Return-on-equity ROE: 17.0
Long Term Debt-to-Equity (MRQ) 0.5
Dividend Yield 2.63%

Given these very compelling attributes why would I not be interested in Autoliv? Because when I checked insider trading, I discovered that all the Directors and Officers were selling in 2006 and 2007 and nobody was buying -- nobody! Even worse, some were selling all of their shares and were going to be holding no shares, that's awful.

The stock had a good ride the past four years, rising about 200% from around $20 to $60 recently; an all-time high. So why is everyone selling? Perhaps they think that the ride is over for this supplier to automobile companies. In any event, this is not the only opportunity in the investment world, so I will look elsewhere.

Those of you who are new to BloggingStocks can check out my other stories and read Chasing Value or Serious Money to find more potential opportunities and verify my track record as well.

Sheldon Liber is the CEO of a small private investment company and the vice president for design and research at an architecture & planning firm. Check out his other posts for BloggingStocks here.

Tags: alv, autoliv, Autoliv (ALV), Autoliv(alv), Chasing Value, ChasingValue, Sheldon Liber, SheldonLiber