Download PDF

1. Company Snapshot

1.a. Company Description

AB Volvo (publ), together with its subsidiaries, manufactures and sells trucks, buses, construction equipment, and marine and industrial engines in Europe, North America, South America, Asia, Africa, and Oceania.The company offers trucks for long-haulage, construction, mining, and distribution purposes under the Volvo, UD Trucks, Renault Trucks, Mack, Eicher, Arquus, cellcentric, and Dongfeng Trucks brands; and city and intercity buses, coaches, and bus chassis, as well as associated transport systems under the Prevost and Nova Bus brands.It also provides construction equipment, including excavators, articulated and rigid haulers, wheel loaders, road construction machines, pavers, and compactors under the brand names of Volvo, and SDLG Trucks.


In addition, the company offers engines and power solutions for leisure and commercial vessels, as well as for power generation, industrial, and off-road applications under the Volvo Penta brand name.Further, it provides financing, insurance, rental, spare parts, repair, preventive maintenance, service agreement, and assistance services.The company offers its products and services through a network of dealerships and workshops.


It has a strategic alliance with Isuzu Motors within commercial vehicles; a partnership with Samsung SDI Co to develop battery packs for its trucks; and an agreement with NVIDIA and Aurora to develop autonomous trucks.AB Volvo (publ) was incorporated in 1915 and is headquartered in Gothenburg, Sweden.

Show Full description

1.b. Last Insights on VOLV

The recent 3-month performance of AB Volvo (publ) was driven by several positive factors. The company's net sales, although declining by 5% adjusted for currency movements, remained robust at SEK 122.9 billion. Sales of vehicles were 6% lower than in Q2 2024, but the underlying service development remained robust, supported by continued good utilization of vehicles and machines. The service sales growth was a notable highlight, with the company's focus on US-built SUVs as tariffs eat into its sedan business from China and the EU. Additionally, Volvo Group's engine plant in Skövde, Sweden, received up to €49 million from the EU Innovation Fund to support the CarbonSmart Factory project: SPACE, advancing the company's transformation through net-zero innovation and clean technology. Furthermore, Volvo CE is divesting its SDLG stake to Lingong Group fund, which is forecast to positively impact Volvo CE's operating income by Skr1bn at closing. The company is also investing $261 million to bolster key production sites, including expanding US construction equipment production, to mitigate supply chain risks.

1.c. Company Highlights

2. Volvo Group's Q4 Earnings: A Resilient Performance Amidst Uncertainty

Volvo Group reported a solid Q4 performance, with a flat sales level adjusted for currency and the divestment of SDLG. Operating income was SEK 12.8 billion, and the operating margin was 10.3%. Earnings per share (EPS) came in at SEK 4.73, beating analyst estimates of SEK 4.64. The company's cash flow generated SEK 19.3 billion, resulting in a net cash position of SEK 63 billion in Industrial Operations. Return on capital employed was 25.3%, a testament to the company's efficient use of capital.

Publication Date: Feb -02

📋 Highlights
  • Operational Strength:: Group reported SEK 12.8B operating income and 10.3% margin, driven by flat sales adjusted for currency and SDLG divestment.
  • Regional Performance:: Europe saw 10% FX-adjusted sales growth led by Trucks and Construction Equipment, while North America faced 8% FX-adjusted sales decline.
  • Service Business Growth:: Service sales grew 5% (adjusted for currency/Sdlg), with Penta’s sales rising 18%, supported by data centers and mining demand.
  • Market Share Recovery:: Volvo Trucks regained North American market share post-VNL launch and maintained 90% dominance in Europe’s heavy-duty segment.
  • Cash Flow & Dividend:: Generated SEK 19.3B cash flow, ending with SEK 63B net cash, alongside a proposed SEK 8.5 + SEK 4.5 extraordinary dividend.

Segment Performance

Truck deliveries declined by 3% in the quarter to 56,700 vehicles, primarily due to a drag in North and South America. However, there was growth in Europe. Construction Equipment deliveries decreased by 46%, but adjusted for SDLG, machine deliveries increased by 9%. The service business continued to grow, with a 5% increase in the quarter, adjusted for currency and SDLG. Penta's sales grew by 18%, supported by data centers, the mining segment, and good demand in Asia.

Market Outlook

The company's market forecast for 2026 was revised upward for North America and Europe. North America is expected to see a flat market, while Europe is expected to see a 5% growth. According to Martin Lundstedt, "the market is showing signs of stabilization, driven by improved visibility on tariffs and EPA '27 clarification uncertainty." This optimism is reflected in the company's guidance for Europe, which is expected to reach 305,000 units.

Valuation Metrics

With a P/E Ratio of 19.12 and an EV/EBITDA of 11.29, the company's valuation appears reasonable. The Dividend Yield is 5.71%, indicating a relatively attractive return for investors. The ROE is 19.41%, suggesting that the company is generating strong returns on equity. Analysts estimate next year's revenue growth at 7.2%, which is a positive indicator for the company's future prospects.

Operational Highlights

The company is investing in retail business and battery production, with plans to present new production plans in the US in January. The Mexican plant is expected to ramp up gradually, without a significant drag on EBIT margin in 2026. The company's commercial discipline has led to better pricing, although Martin Lundstedt notes that supply-demand dynamics may lead to a squeeze in pricing during the recovery.

Future Prospects

The company is optimistic about the development of autonomous commercial vehicles, particularly in the hub-to-hub segment. With a strong order intake and a solid pipeline, Volvo Group is well-positioned to navigate the challenges and opportunities in the market. The company's focus on total cost of ownership (TCO) and its fully electric offerings are expected to drive growth in the bus segment.

3. NewsRoom

Card image cap

Is Allison Transmission Holdings (ALSN) Stock Outpacing Its Auto-Tires-Trucks Peers This Year?

Jan -28

Source:

Card image cap

3 European Stocks Estimated To Be Undervalued By At Least 27.4%

Jan -26

Source:

Card image cap

AB Volvo (OM:VOLV B) Valuation Check As Momentum Cools After Recent Share Price Gains

Jan -21

Source:

Card image cap

Volvo upgraded to Buy from Hold at Nordea

Jan -20

Source:

Card image cap

Caterpillar vs. Volvo: Which Heavy Equipment Stock is the Better Buy?

Jan -19

Source:

Card image cap

Does Volvo’s Recent Electric Vehicle Investment Signal a Value Opportunity in 2025?

Nov -09

Source:

Card image cap

STRT or VLVLY: Which Is the Better Value Stock Right Now?

Nov -05

Source:

Card image cap

Uber Is Crushing Lyft—And It’s Not Even Close

Nov -04

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.60%)

6. Segments

Industrial Operations - Trucks

Expected Growth: 5.4%

Growing construction activities, increasing demand for fuel-efficient vehicles, and rising government investments in infrastructure development are expected to drive the growth of AB Volvo's heavy-duty trucks, construction equipment, and buses under Volvo, Mack, and Renault brands.

Industrial Operations - Construction Equipment

Expected Growth: 5.3%

Increasing infrastructure investments, urbanization, and demand for energy-efficient equipment fuel the growth of AB Volvo's construction equipment segment, driving growth in excavators, wheel loaders, and asphalt pavers.

Financial Services

Expected Growth: 8.5%

Increasing demand for financing solutions, growth in emerging markets, and Volvo's strong brand reputation drive segment growth.

Industrial Operations - Buses

Expected Growth: 6.3%

Volvo's bus and chassis segment is driven by increasing demand for sustainable transportation, growing urbanization, and government initiatives promoting eco-friendly public transport, leading to a forecasted growth rate.

Industrial Operations - Group Functions and Other

Expected Growth: 4.5%

Volvo Group's diversified operations drive growth, supported by increasing demand for sustainable transport solutions and growing aftermarket services.

Industrial Operations - Volvo Penta

Expected Growth: 5.5%

Demand for eco-friendly and fuel-efficient engines drives growth in marine applications, while industrial applications benefit from increasing investments in infrastructure and manufacturing capacity.

Eliminations

Expected Growth: 4.2%

AB Volvo’s growth is expected to be driven by demand for sustainable transportation solutions, investments in electromobility, and increasing adoption of automation and digitalization technologies, leading to improved profitability and enhanced competitiveness.

Reclassifications and Eliminations

Expected Growth: 2.5%

Reclassifications and Eliminations, driven by adjustments for discontinued operations and other non-organic changes, are expected to grow at a CAGR of 2.5%. AB Volvo’s strategic initiatives will support this expansion.

7. Detailed Products

Trucks

Volvo Trucks provides a range of commercial vehicles, including heavy-duty trucks, medium-duty trucks, and light-duty trucks, designed for various applications such as long-haul transportation, construction, and distribution.

Buses

Volvo Buses offers a range of city buses, coach buses, and tourist buses, designed for public transportation, commuter services, and tourism.

Construction Equipment

Volvo Construction Equipment provides a range of heavy machinery, including excavators, wheel loaders, and articulated haulers, designed for construction, mining, and quarrying applications.

Marine Engines

Volvo Penta provides a range of marine engines and propulsion systems, designed for leisure boats, commercial vessels, and industrial applications.

Industrial Engines

Volvo Penta provides a range of industrial engines, designed for power generation, pumping, and compressor applications.

Financial Services

Volvo Financial Services provides financial solutions, including financing, leasing, and insurance, designed for customers and dealers.

8. AB Volvo (publ)'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for AB Volvo (publ) is medium due to the presence of alternative modes of transportation and logistics services. However, the company's strong brand reputation and diversified product offerings mitigate this threat to some extent.

Bargaining Power Of Customers

The bargaining power of customers for AB Volvo (publ) is low due to the company's strong market position and the lack of significant buyer concentration in the industry.

Bargaining Power Of Suppliers

The bargaining power of suppliers for AB Volvo (publ) is medium due to the presence of a few large suppliers in the industry. However, the company's strong relationships with its suppliers and its diversified supply chain mitigate this threat to some extent.

Threat Of New Entrants

The threat of new entrants for AB Volvo (publ) is low due to the high barriers to entry in the industry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry for AB Volvo (publ) is high due to the presence of several established competitors in the industry, including Daimler, Volkswagen, and Scania. The company's strong market position and diversified product offerings help to mitigate this threat to some extent.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 57.18%
Debt Cost 3.95%
Equity Weight 42.82%
Equity Cost 9.24%
WACC 6.21%
Leverage 133.54%

11. Quality Control: AB Volvo (publ) passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Vinci

A-Score: 6.7/10

Value: 6.3

Growth: 6.1

Quality: 4.7

Yield: 6.9

Momentum: 7.0

Volatility: 9.0

1-Year Total Return ->

View Full Report
Stock-Card
PACCAR

A-Score: 6.0/10

Value: 4.1

Growth: 6.7

Quality: 5.0

Yield: 8.0

Momentum: 4.0

Volatility: 8.3

1-Year Total Return ->

View Full Report
Stock-Card
Volvo

A-Score: 5.6/10

Value: 3.7

Growth: 6.4

Quality: 4.3

Yield: 8.8

Momentum: 4.0

Volatility: 6.3

1-Year Total Return ->

View Full Report
Stock-Card
Daimler Truck

A-Score: 5.1/10

Value: 6.5

Growth: 4.8

Quality: 3.2

Yield: 6.9

Momentum: 4.0

Volatility: 5.0

1-Year Total Return ->

View Full Report
Stock-Card
BAE Systems

A-Score: 4.9/10

Value: 2.4

Growth: 6.8

Quality: 4.9

Yield: 5.0

Momentum: 4.5

Volatility: 6.0

1-Year Total Return ->

View Full Report
Stock-Card
Epiroc

A-Score: 4.6/10

Value: 2.0

Growth: 6.2

Quality: 7.1

Yield: 3.1

Momentum: 3.5

Volatility: 5.7

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

350.4$

Current Price

350.4$

Potential

-0.00%

Expected Cash-Flows