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Bull of the Day: Volvo (VLVLY)

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Among automakers, Volvo (VLVLY - Free Report) ) stock is standing out at the moment with a Zacks Rank #1 (Strong Buy) and an overall “A” VGM Style Scores grade for the combination of Value, Growth, and Momentum.

As the parent company of Volvo Group, Sweden-based AB Volvo recently hit 52-week highs earlier in the month and looks poised to continue growing its products and services.

The Volvo Group manufactures cars, trucks, buses, construction equipment, and diesel engines along with marine and industrial engines. In addition to this, its offering includes insurance, rental services, spare parts, and preventive maintenance among other services.

EV Growth

Volvo had a record year for revenue in 2022 driven by its progression into the EV space. In fact, Volvo is making the push to be fully electric by 2030 with EVs accounting for 11% of its total sales last year compared to 4% in 2021.

Even better, this strong performance is spilling over into 2023 with Volvo most recently reporting sales of 51,286 cars in February, up 22% year over year. February’s growth was attributed to its Recharge hybrid vehicles which made up 40% of global car sales while its fully electric car sales increased an impressive 187% YoY and accounted for 19% of total sales.

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Volvo’s earnings are expected to be up 6% this year and rise another 1% in FY24 at $1.72 per share. Earnings estimate revisions have remained higher over the last 60 days.

After its record year, Volvo’s sales are forecasted to dip -1% in FY23 and be virtually flat in FY24 at $46.24 billion. However, Fiscal 2024 would still be above pre-pandemic levels with 2019 sales at $45.70 billion.

Performance & Valuation

Volvo stock is up +9% year to date to outperform the S&P 500’s virtually flat performance and the Auto -Truck-Origional Equipment Markets +1%. Over the last three years, Volvo’s +80% has also topped the benchmark and absolutely crushed its Zack Subindustry’s -28% performance.

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Volvo’s strong performance in recent years while other automakers struggled has been very impressive and this could continue based on the company’s valuation.

Shares of VLVLY trade at $19 and 11.1X forward earnings which is nicely below its industry average of 13.1X and the S&P 500’s 17.7X. Volvo stock also trades 65% below its five-year high of 31.7X and slightly below the median of 11.4X.

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Image Source: Zacks Investment Research


The EV growth of Volvo is very intriguing and the strong February numbers are starting to reaffirm that 2023 could be another stellar year for the company. While there are many companies competing in the EV space Volvo is one that investors will not want to overlook as the company has a strong track record of automotive engineering that dates back to 1927.  

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