Critical Survey: Autoliv (NYSE:ALV) versus Schaeffler (OTCMKTS:SCFLF)

Schaeffler (OTCMKTS:SCFLF) and Autoliv (NYSE:ALV) are both auto/tires/trucks companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, dividends, institutional ownership, risk, valuation, analyst recommendations and earnings.

Institutional and Insider Ownership

69.6% of Autoliv shares are owned by institutional investors. 0.3% of Autoliv shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Risk and Volatility

Schaeffler has a beta of 0.89, suggesting that its share price is 11% less volatile than the S&P 500. Comparatively, Autoliv has a beta of 1.35, suggesting that its share price is 35% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Schaeffler and Autoliv, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Schaeffler	0	0	1	0	3.00
Autoliv	0	5	8	0	2.62

Autoliv has a consensus price target of $135.27, indicating a potential upside of 13.10%. Given Autoliv’s higher possible upside, analysts plainly believe Autoliv is more favorable than Schaeffler.

Valuation & Earnings

This table compares Schaeffler and Autoliv”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Schaeffler	$19.68 billion	0.04	-$683.89 million	($1.31)	-3.66
Autoliv	$10.81 billion	0.83	$735.00 million	$9.30	12.86

Autoliv has lower revenue, but higher earnings than Schaeffler. Schaeffler is trading at a lower price-to-earnings ratio than Autoliv, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Schaeffler and Autoliv’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Schaeffler	-4.73%	-10.43%	-1.77%
Autoliv	6.45%	29.03%	8.75%

Summary

Autoliv beats Schaeffler on 12 of the 14 factors compared between the two stocks.

About Schaeffler

Schaeffler AG, together with its subsidiaries, develops, manufactures, and sells components and system for industrial applications in Europe, the Americas, China, and the Asia Pacific. The Automotive Technologies division offers mechanical, mechatronic, and electronic components and systems for powertrain electrification used in passenger cars and commercial vehicles, such as electric motors, axle transmissions, axle drives, power electronics, hybrid modules, electromechanical and hydraulic actuators, and thermal management module; torque converters, hybrid dampers, clutches, variable valve train systems, valve-lash adjustment elements, balancer shafts, camshaft phasing systems, timing drives, and front end auxillary drives. This division provides rolling bearing application and products, such as wheel, ball, and needle roller bearings; and mechanical components and mechatronic systems for steering and other chassis applications, including Space Drive, a steer-by-wire system. The Automotive Aftermarket division offers components and repair solutions for light commercial vehicles, trucks and buses, and offroad sectors under the LuK, INA, and FAG brand names, as well as service for repair shops under the REPXPERT brand. The Industrial division develops and manufactures rotary and linear bearing solutions, drive technology components and systems, and service solutions, such as sensor-based condition monitoring systems. This division serves customers in the wind, raw materials, aerospace, rail, offroad, two wheelers, power transmission, and industrial automation sectors. The company was formerly known as INA Beteiligungsgesellschaft mit beschränkter Haftung and changed its name to Schaeffler AG in October 2014. The company was founded in 1946 and is headquartered in Herzogenaurach, Germany. Schaeffler AG is a subsidiary of IHO Verwaltungs GmbH.

About Autoliv

Autoliv, Inc., through its subsidiaries, develops, manufactures, and supplies passive safety systems to the automotive industry in Europe, the Americas, China, Japan, and rest of Asia. It offers passive safety systems, including modules and components for frontal-impact airbag protection systems, side-impact airbag protection systems, seatbelts, steering wheels, and inflator technologies. The company also provides mobility safety solutions, such as pedestrian protection, battery cut-off switches, connected safety services, and safety solutions for riders of powered two wheelers. It primarily serves car manufacturers. Autoliv, Inc. was founded in 1953 and is headquartered in Stockholm, Sweden.