AB Volvo (publ)
Research
Buy by micke (20/04/2024)
- 320.00 +19.99% by 04/04/2025
A very well managed company which should be able to continue to deliver fine results in the long run. The main business is trucks with construction equipment as a runner up. Currently Volvo (and Traton) expect the demand to normalise, which means that expected sales for 2024 are declining probably around 10% from record high in 2023. Both Volvo and Traton talk about defending margins. In my opinion Volvo seems to be the best trucking company now, the valuation seems low compared to many other industries but higher than its competitor Traton which is more of a turnaround case. The big question is how profits will develop. Long term I think AB Volvo is a buy, but short term not sure. After some consideration I think it is a buy now, there is a reasonably good chans that Volvo will be less cyclical going forward and there for motivated P/E should increase while I don't expect profits to drop that much even as volumes decrease 10%.
Valuation (2)
The service business is a large part of Volvo’s revenue and profit. I get the impression that Volvo is becoming more and more stable, i.e. less cyclic and this could increase analysts’ perception of what the motivated P/E should be. When Volvo is less cyclical analysts might raise their models P/E from today’s 12 to 14. At the time of writing, P/E=11.7, which I think is too low.
19/04/2024 by MICKE｜01All the major companies in the truck manufacturing business have quite low valuations based on results for 2023, Volvo has guided for lower sales during 2024 which the market probably is also expecting. The business is cyclical which also has a negative effect on valuation, however I think the cyclical nature or the business has been reduced and will continue to be reduced by a larger part of profits coming from services. In contract to the financial crisis 2009 Volvo is now cash positive, to avoid financial problems arising out of variation in the markets.
04/04/2024 by MICKE｜01Business (2)
Revenue percentage from 2024Q1................................
19/04/2024 by MICKE｜01The truck market has been very strong 2023, and is expected to normalize i.e. decline 2024. Volovo truck sales have been declining a bit more than expected 2024Q1. Sometimes this is dependent on Volvo temporarily not accepting new orders when the books are full. I recollect Traton saying they have orders to cover 2024.
2024-04-03 Orderingången av tunga lastbilar i Nordamerika sjönk i mars - ACT Research (Finwire)
Orderingången av tunga lastbilar (class-8) i Nordamerika låg preliminärt på 17 300 enheter i mars. Det innebär en minskning med 10 400 enheter jämfört med februari och är 18,7 procent lägre än samma månad året innan. Det visar färsk statistik från ACT Research.
Justerat för säsongseffekter var orderingången 17 100 enheter, en minskning med 8,6 procent jämfört med februari. Mars blev den första månaden sedan maj 2023 med en säsongsjusterad nivå under 20 000 enheter.
04/04/2024 by MICKE｜01People (1)
Martin Lundstedt seems like an excelent CEO. The CFO is quite new on the role.
Carl-Henric Svanberg was replaced by Pär Boman on the AGM 2024.
04/04/2024 by MICKE｜01Risks (2)
From a share price perspective there is a risk that international retail investors would mix up AB Volvo and Volvo Cars, as well as not understanding the concept of extra dividend payment. There are examples of both on yahoo finance.
05/04/2024 by MICKE｜01There are customers that claim that they have over paid in relation to to many year old, case against the EU truck companies about price collaboration. A German court decided that the trial should be held.
2024-03-28 "Daimler Truck och Volvo kommer att ställas inför en ny rättegång i ett mål om 560 miljoner euro gällande prisfixering. Det beslutet tog en tysk appellationsdomstol idag, skriver Bloomberg News. "
04/04/2024 by MICKE｜01