ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Volvo AB's annualized return on invested capital (ROIC %) for the quarter that ended in Mar. 2026 was 6.23%.
As of today (2026-06-24), Volvo AB's WACC % is 6.93%. Volvo AB's ROIC % is 6.39% (calculated using TTM income statement data).
Volvo AB earns returns that do not match up to its cost of capital. It will destroy value as it grows.
Volvo AB (OTCPK:VOLAF) ROIC % Explanation
ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.
There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.
Why is ROIC % important?
Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.
As of today, Volvo AB's WACC % is 6.93%. Volvo AB's ROIC % is 6.39% (calculated using TTM income statement data).
Volvo AB earns returns that do not match up to its cost of capital. It will destroy value as it grows.
Be Aware
Like ROE % and ROA %, ROIC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
Volvo AB ROIC % Related Terms
Volvo AB ROIC % Historical Data
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The historical data trend for Volvo AB's ROIC % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
For the Farm & Heavy Construction Machinery subindustry, Volvo AB's ROIC %, along with its competitors' market caps and ROIC % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Volvo AB ROIC % vs Farm & Heavy Construction Machinery Industry
For the Farm & Heavy Construction Machinery industry and Industrials sector, Volvo AB's ROIC % distribution charts can be found below:
* The bar in red indicates where Volvo AB's ROIC % falls into.
Note:
The Operating Income data used here is four times the quarterly (Mar. 2026) data.
The tax rate is limited to between 0% and 100%.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Volvo AB (VOLAF) has a ROIC % of 6.23% as of Mar. 2026. Return on invested capital is the ratio of current-period net income to average two-period invested capital. View historical data on Volvo AB and its competitors.
Is Volvo AB's ROIC % too high?
Volvo AB's current ROIC % is 6.23%. The Farm & Heavy Construction Machinery industry median ROIC % is 5.47. Volvo AB's value of 6.23% is 13.9% above this industry median. Overall, Volvo AB has a GF Score™ of 92/100 and is considered Modestly Overvalued, reflecting its overall financial health beyond just this single metric.
How does Volvo AB's ROIC % compare to CAT and DE?
Volvo AB's ROIC % of 6.23% can be compared against companies in the Farm & Heavy Construction Machinery industry. The industry median ROIC % is 5.47. Volvo AB's value of 6.23% is 13.9% above this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good ROIC % for a Farm & Heavy Construction Machinery company?
The median ROIC % among Farm & Heavy Construction Machinery companies is 5.47, based on 207 companies in the industry. Companies in the top quartile (top 25%) have a ROIC % significantly above this median, while those in the bottom quartile fall well below. However, ROIC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Volvo AB's current ROIC % of 6.23% is 13.9% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high ROIC % mean?
A high ROIC % can signal that a stock is expensive relative to its fundamentals. Return on invested capital is the ratio of current-period net income to average two-period invested capital. View historical data on Volvo AB and its competitors. For the Farm & Heavy Construction Machinery industry, the median ROIC % is 5.47 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Volvo AB's current ROIC % is 6.23%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Volvo AB stock overvalued right now?
Based on GuruFocus' analysis, Volvo AB (VOLAF) is currently considered Modestly Overvalued. The stock's GF Value™ is $28.60, compared to a current price of $34.15 — trading 19.4% above its estimated fair value. The current ROIC % is 6.23% and 13.9% above the Farm & Heavy Construction Machinery industry median of 5.47. Volvo AB's overall GF Score™ is 92/100 with 6 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is ROIC % calculated?
ROIC % is calculated from a company's financial statements. For Volvo AB (VOLAF), the current ROIC % is 6.23% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Volvo AB (VOLAF) Overvalued in 2026?
Based on GuruFocus' analysis, Volvo AB stock appears to be overvalued.
The current stock price of $34.15 is trading 19.4% above its estimated GF Value™ of $28.60.
GuruFocus considers Volvo AB to be Modestly Overvalued.
Key valuation signals for VOLAF:
ROIC %: 6.23%
GF Value™: $28.60 vs. price of $34.15 (19.4% above fair value)
Industry Position: 13.9% above the Farm & Heavy Construction Machinery median
No single metric tells the full story. See the VOLAF stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
The Volvo Group is one of the largest global truck, bus, construction equipment, and engine and power system original equipment manufacturers, operating with the Volvo, Renault Truck, Mack Trucks, Volvo Penta, and Nova Bus brands. Among the four largest Western global brands—Volvo, Daimler, Paccar, and Traton—Volvo ranks third in terms of annual deliveries. Its truck, construction equipment, bus, and engines and power system segments contributed 71%, 18%, 5%, and 5%, respectively, to industrial operations' revenue in 2025. An in-house financial services division supports these businesses. In its key regions of Europe, North America, Brazil, and Australia, the truck business holds large market shares of 29%, 17%, 24%, and 22%, respectively.
92GF Score
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