Is Now An Opportune Moment To Examine AB Volvo (publ) (STO:VOLV B)?

Today we're going to take a look at the well-established AB Volvo (publ) (STO:VOLV B). The company's stock saw a double-digit share price rise of over 10% in the past couple of months on the OM. While good news for shareholders, the company has traded much higher in the past year. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Today we will analyse the most recent data on AB Volvo’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for AB Volvo

Is AB Volvo Still Cheap?

Great news for investors – AB Volvo is still trading at a fairly cheap price. According to our valuation, the intrinsic value for the stock is SEK350.87, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that AB Volvo’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will AB Volvo generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted profit growth of 4.4% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for AB Volvo, at least in the short term.

What This Means For You

Are you a shareholder? Even though growth is relatively muted, since VOLV B is currently undervalued, it may be a great time to increase your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on VOLV B for a while, now might be the time to enter the stock. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy VOLV B. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. To help with this, we've discovered 2 warning signs (1 can't be ignored!) that you ought to be aware of before buying any shares in AB Volvo.

If you are no longer interested in AB Volvo, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.