Volvo Car AB (publ.) Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

It's been a mediocre week for Volvo Car AB (publ.) (STO:VOLCAR B) shareholders, with the stock dropping 17% to kr20.92 in the week since its latest annual results. It looks like the results were a bit of a negative overall. While revenues of kr400b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 7.6% to hit kr5.17 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

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

Following last week's earnings report, Volvo Car AB (publ.)'s eleven analysts are forecasting 2025 revenues to be kr393.9b, approximately in line with the last 12 months. Statutory earnings per share are forecast to decrease 7.8% to kr4.78 in the same period. In the lead-up to this report, the analysts had been modelling revenues of kr407.0b and earnings per share (EPS) of kr5.59 in 2025. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a real cut to earnings per share numbers.

The analysts made no major changes to their price target of kr24.75, suggesting the downgrades are not expected to have a long-term impact on Volvo Car AB (publ.)'s valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Volvo Car AB (publ.) at kr31.00 per share, while the most bearish prices it at kr20.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 1.6% by the end of 2025. This indicates a significant reduction from annual growth of 11% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 1.9% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Volvo Car AB (publ.) is expected to lag the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Volvo Car AB (publ.). Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Volvo Car AB (publ.) going out to 2027, and you can see them free on our platform here..

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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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.