Should You Think About Buying AB Volvo (publ) (STO:VOLV B) Now?

Today we're going to take a look at the well-established AB Volvo (publ) (STO:VOLV B). The company's stock received a lot of attention from a substantial price movement on the OM over the last few months, increasing to kr287 at one point, and dropping to the lows of kr250. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether AB Volvo's current trading price of kr256 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at AB Volvo’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for AB Volvo

What's The Opportunity In AB Volvo?

Good news, investors! AB Volvo is still a bargain right now. Our valuation model shows that the intrinsic value for the stock is SEK391.13, but it is currently trading at kr256 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, AB Volvo’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from AB Volvo?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 negative profit growth of -4.3% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for AB Volvo. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although VOLV B is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to VOLV B, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on VOLV B for a while, but hesitant on making the leap, we recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you'd like to know more about AB Volvo as a business, it's important to be aware of any risks it's facing. When we did our research, we found 2 warning signs for AB Volvo (1 is significant!) that we believe deserve your full attention.

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.

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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.