Earnings Miss: Volvo Car AB (publ.) Missed EPS By 18% And Analysts Are Revising Their Forecasts

Volvo Car AB (publ.) (STO:VOLCAR B) missed earnings with its latest first-quarter results, disappointing overly-optimistic forecasters. Volvo Car AB (publ.) missed earnings this time around, with kr94b revenue coming in 6.1% below what the analysts had modelled. Statutory earnings per share (EPS) of kr1.12 also fell short of expectations by 18%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Volvo Car AB (publ.)

Taking into account the latest results, the most recent consensus for Volvo Car AB (publ.) from ten analysts is for revenues of kr430.3b in 2024. If met, it would imply a decent 8.2% increase on its revenue over the past 12 months. Per-share earnings are expected to surge 38% to kr5.94. Yet prior to the latest earnings, the analysts had been anticipated revenues of kr440.7b and earnings per share (EPS) of kr5.81 in 2024. So it's pretty clear that while sentiment around revenues has declined following the latest results, the analysts are now more bullish on the company's earnings power.

There's been no real change to the average price target of kr39.18, with the lower revenue and higher earnings forecasts not expected to meaningfully impact the company's valuation over a longer timeframe. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Volvo Car AB (publ.) at kr48.00 per share, while the most bearish prices it at kr32.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 11% growth on an annualised basis. That is in line with its 9.5% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 3.1% annually. So it's pretty clear that Volvo Car AB (publ.) is forecast to grow substantially faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Volvo Car AB (publ.)'s earnings potential next year. They also downgraded Volvo Car AB (publ.)'s revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Yet - earnings are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Volvo Car AB (publ.) going out to 2026, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 1 warning sign for Volvo Car AB (publ.) you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.