Volvo Car AB (publ.) Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

Volvo Car AB (publ.) (STO:VOLCAR B) investors will be delighted, with the company turning in some strong numbers with its latest results. The company beat forecasts, with revenue of kr86b, some 3.9% above estimates, and statutory earnings per share (EPS) coming in at kr1.75, 338% ahead of expectations. 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.

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Taking into account the latest results, Volvo Car AB (publ.)'s ten analysts currently expect revenues in 2026 to be kr372.9b, approximately in line with the last 12 months. Per-share earnings are expected to shoot up 911% to kr4.74. In the lead-up to this report, the analysts had been modelling revenues of kr370.3b and earnings per share (EPS) of kr3.78 in 2026. Although the revenue estimates have not really changed, we can see there's been a great increase in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.

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

The consensus price target rose 30% to kr23.63, suggesting that higher earnings estimates flow through to the stock's valuation as well. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Volvo Car AB (publ.), with the most bullish analyst valuing it at kr37.00 and the most bearish at kr16.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Volvo Car AB (publ.)'s past performance and to peers in the same industry. We would highlight that revenue is expected to reverse, with a forecast 0.4% annualised decline to the end of 2026. That is a notable change from historical growth of 9.4% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.5% annually for the foreseeable future. It's pretty clear that Volvo Car AB (publ.)'s revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Volvo Car AB (publ.) following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Volvo Car AB (publ.)'s revenue is expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Volvo Car AB (publ.). Long-term earnings power is much more important than next year's profits. We have forecasts for Volvo Car AB (publ.) going out to 2027, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 3 warning signs for Volvo Car AB (publ.) that you need to be mindful 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.