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Risk-to-Price Commentary: Volvo Treasury AB May 11
Standard & Poors, May 2011
Abstract
On April 27, Volvo AB (Volvo), Sweden's largest maker of trucks, reported first-quarter results that beat analysts' estimates at both top-line and net income levels. Net income rose to SEK4.09 billion, compared with SEK1.68 billion a year earlier. The analysts' mean estimate of earnings was SEK3.49 billion. Earnings per share at SEK2.01 also came out 21% higher than estimated, according to the Capital IQ analyst consensus. Sales rose by 22% to SEK71.6 billion against analysts' estimates of SEK71.4 billion. Volvo's share price shot up 2% on the day of the announcement, and continued rising in the following few days (see chart 1). The Valuation and Risk Strategies (VRS) research team investigated whether Volvo's robust equity performance reflected the company's debenture...
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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