Volvo Car AB (publ.) Just Beat EPS By 83%: Here's What Analysts Think Will Happen Next

Shareholders might have noticed that Volvo Car AB (publ.) (STO:VOLCAR B) filed its interim result this time last week. The early response was not positive, with shares down 4.8% to kr19.34 in the past week. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at kr150b, statutory earnings beat expectations by a notable 83%, coming in at kr0.97 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

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Following last week's earnings report, Volvo Car AB (publ.)'s twelve analysts are forecasting 2026 revenues to be kr336.8b, approximately in line with the last 12 months. Statutory earnings per share are expected to dive 27% to kr2.31 in the same period. Before this earnings report, the analysts had been forecasting revenues of kr341.6b and earnings per share (EPS) of kr2.57 in 2026. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

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

It might be a surprise to learn that the consensus price target was broadly unchanged at kr19.79, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on 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. There are some variant perceptions on Volvo Car AB (publ.), with the most bullish analyst valuing it at kr23.70 and the most bearish at kr17.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. We would highlight that Volvo Car AB (publ.)'s revenue growth is expected to slow, with the forecast 3.5% annualised growth rate until the end of 2026 being well below the historical 5.3% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 3.7% annually. So it's pretty clear that, while Volvo Car AB (publ.)'s revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. 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.

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 estimates - from multiple Volvo Car AB (publ.) analysts - going out to 2028, 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 1 warning sign 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.