November 14, 2024
Top 10 Stock Volvo Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Volvo – Top 10 Stock in Optionsmäklarna Stockholm Stock Exchange Stockholm Index OMX 30
Volvo is listed as a top 10 stock on November 14, 2024 in the market index OMX 30 because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. The company is growing above average and professional investor sentiment is positive. Both are encouraging signals for a stock purchase decision, albeit at an above-average share price. Based on the Obermatt 360° View of 63 (high 63% performer), Obermatt assesses an overall buy recommendation for Volvo on November 14, 2024.
Snapshot: Obermatt Ranks
| Country | Sweden |
| Industry | Heavy Machinery |
| Index | Dividends Europe, Human Rights, Renewables Users, OMX 30 |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Volvo Buy
| 360 METRICS | November 14, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 24 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 70 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 37 |
|
||||||
| SENTIMENT | ||||||||
| SENTIMENT | 77 |
|
||||||
| 360° VIEW | ||||||||
| 360° VIEW | 63 |
|
||||||
ANALYSIS: With an Obermatt 360° View of 63 (better than 63% compared with alternatives), overall professional sentiment and financial characteristics for the stock Volvo are above average. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Volvo. The consolidated Growth Rank has a good rank of 70, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. This means that growth is higher than for 70% of competitors in the same industry. The consolidated Sentiment Rank also has a good rank of 77, which means that professional investors are more optimistic about the stock than for 77% of alternative investment opportunities. But the consolidated Value Rank has a less desirable rank of 24, which means that the share price of Volvo is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 76% of alternative stocks in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 37, which means that the company has a financing structure that is riskier than those of 63% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more
RECOMMENDATION: With a consolidated 360° View of 63, Volvo is better positioned than 63% of all alternative stock investment opportunities based on the Obermatt Method. Only half of the consolidated Obermatt Ranks exhibit excellent performance, so one needs to take a close look. Growth is above-average (Growth Rank of 70), and professional market sentiment is positive (Sentiment Rank of 77), but value and safety are below average. The Safety Rank is the least significant of the four consolidated ranks, because it only reflects financing practices. In the case of high growth, aggressive financing is a good thing. So the question is: How to assess below-average value against above-average growth and sentiment? Growth may be the strongest driver of the investment rationale in this case, which is reflected in institutional investors' opinions. It is typical for growth companies to have low value, as is the case here. Investors are willing to pay more for companies that outperform their competitors. So the question is, how much do you sacrifice value for growth? You can use the following rule of thumb: If you take 100 minus the growth rank, you arrive at a possibly minimum level for the value rank. For example, if the growth rank is at 75, and the value rank is at 5, you should tread carefully. If the value rank is at 40, it still might be a good value if the growth rank is above 60. Sometimes market sentiment just extrapolates the past, but sometimes it reflects reality. You pay more than the market average for this stock, but it may be worth it. ...read more
Sentiment Strategy: Professional Market Sentiment for Volvo very positive
ANALYSIS: With an Obermatt Sentiment Rank of 77 (better than 77% compared with alternatives) for 2024, overall professional sentiment and engagement for the stock Volvo is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for Volvo. Analyst Opinions are at a rank of 48 (worse than 52% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. Worse, Analyst Opinions Change has a rank of 24, which means that stock research experts are getting even more pessimistic. Other sentiment indicators are positive: The Professional Investors rank is 76, which means that professional investors hold more stock in this company than in 76% of alternative investment opportunities. So, pros tend to favor investing in this company. In addition, Market Pulse has a rank of 87, which means that the current professional news and professional social networks tend to be positive when discussing this company (more positive news than for 87% of competitors). While stock research analysts are getting ever more critical, many professional investors are committed to Volvo and the professional news channels are on the positive side. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 77 (more positive than 77% compared with investment alternatives), Volvo has a reputation among professional investors that is significantly higher than that of its competitors. This is an ambiguous picture: analysts are negative and getting even more critical, while the news in the market is positive. Who should investors believe? This is a difficult question in such a situation. Investors should proceed cautiously and verify not only the financial performance in the Obermatt Value, Growth and Safety Ranks but also independent news coverage of the company. ...read more
Value Strategy: Volvo Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 24 (worse than 76% compared with alternatives), Volvo shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Volvo. Price-to-Profit (also referred to as price-earnings, P/E) is 52 which means that the stock price compared with what market professionals expect for future profits is lower than for 52% of comparable companies, indicating a good value concerning Volvo's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 19, which means that the stock price is lower as regards to invested capital than for 19% of comparable investments. On the other hand, Price-to-Sales is less favorable than 76% of alternatives (only 24% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 10% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 24, is a sell recommendation based on Volvo's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high in respect to expected revenues, it means that the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than pay it out to shareholders, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. ...read more
Growth Strategy: Volvo Growth Momentum good
| GROWTH METRICS | November 14, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 22 |
|
||||||
| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 31 |
|
||||||
| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 73 |
|
||||||
| STOCK RETURNS | ||||||||
| STOCK RETURNS | 86 |
|
||||||
| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 70 |
|
||||||
ANALYSIS: With an Obermatt Growth Rank of 70 (better than 70% compared with alternatives), Volvo shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Volvo. Capital Growth has a rank of 73, which means that currently professionals expect the company to grow its invested capital more than 31% of its competitors. Investors welcomed this, visible in the Stock Returns rank of 86 (above 86% of alternative investments). But Sales Growth has only a rank of 22, which means that, currently, professionals expect the company to grow less than 78% of its competitors, and Profit Growth is also low at a rank of 31. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 70, is a buy recommendation for growth and momentum investors. This is an ambiguous picture. Revenue growth and capital growth are strong, but the growth in profit, which seems good, can also be an indication that growth momentum may be negative. The fact that stock returns have been above average doesn't help much, as stock returns are less reliable in showing a company’s future growth potential. Prices may perform well for the simple reason that investors were too pessimistic in the past and are now correcting their opinions and moving the stock price to a more reasonable level. As the growth picture is mixed for Volvo, investors may want to look at value and sentiment indicators for a well-rounded picture of this stock. ...read more
Safety Strategy: Volvo Debt Financing Safety below-average
| SAFETY METRICS | November 14, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| LEVERAGE | ||||||||
| LEVERAGE | 13 |
|
||||||
| REFINANCING | ||||||||
| REFINANCING | 32 |
|
||||||
| LIQUIDITY | ||||||||
| LIQUIDITY | 90 |
|
||||||
| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 37 |
|
||||||
ANALYSIS: With an Obermatt Safety Rank of 37 (better than 37% compared with alternatives), the company Volvo has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of Volvo is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for Volvo. Liquidity is at 90, meaning the company generates more profit to service its debt than 90% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 32, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 68% of its competitors. Leverage is also high at a rank of 13, which means that the company has an above-average debt-to-equity ratio. It has more debt than 87% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 37 (worse than 63% compared with alternatives), Volvo has a financing structure that is riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more
Combined financial peformance: Volvo Below-Average Financial Performance
| COMBINED PERFORMANCE | November 14, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 24 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 70 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 90 |
|
||||||
| COMBINED | ||||||||
| COMBINED | 37 |
|
||||||
ANALYSIS: With an Obermatt Combined Rank of 37 (worse than 63% compared with investment alternatives), Volvo (Heavy Machinery, Sweden) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Volvo are low in value (priced high) with a consolidated Value Rank of 24 (worse than 76% of alternatives), and are riskily financed (Safety Rank of 37, which means above-average debt burdens) but show above-average growth (Growth Rank of 70). ...read more
RECOMMENDATION: A Combined Rank of 37, is a hold recommendation based on Volvo's financial characteristics. As the company Volvo shows low value with an Obermatt Value Rank of 24 (76% of comparable investments are less expensive), investors should look at the other ranks. In this case, growth is expected to be above-average, better than 70% of comparable companies (Obermatt Growth Rank is 70). This is a typical case. Companies with above average growth tend to cost more than stocks with slower growth expectations. If this is a high-growth company, the low Obermatt Safety Rank of 37 is a good sign. The more debt a well-performing company has, the higher the returns to shareholders. However, if growth turns negative or interest rates increase, high debt may become a burden. If you believe the future is bright for Volvo, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
Obermatt Portfolio Performance
We’re so convinced about our research, that we buy our stock tips.
See the performance of the Obermatt portfolio.