Handelsbanken assesses that the industrial sector has moved past the bottom of the industry cycle after six consecutive quarters of organic order growth, according to a new analysis.
The bank expects profits to rise by double digits in 2026, supported by interest rate cuts and an increased need to replace aging machinery.
At the same time, share prices are seen as already having factored in a recovery. The industrial sector is trading at just over 16x EV/EBIT on a twelve-month basis, which is above the historical average, the analysts note.
As a result, the bank has adopted a more cautious outlook on the sector and believes that quality companies may perform better than more cyclical stocks.
Sector favorites include Alfa Laval, Atlas Copco, Beijer Ref, Kalmar, SKF, Valmet, and Volvo.
Since early April last year, Handelsbanken has maintained a buy recommendation on all the aforementioned companies and is making no adjustments in this sector review.
AB Volvo is the leading European truck maker and No. 3 worldwide. Net sales break down by activity as follows:
- sales of trucks (68.4%): 219,377 vehicles sold in 2024 (names Volvo, Renault, Eicher and Mack);
- sales of construction equipment (16.8%): excavators, loaders, backhoes, hydraulic shovels, graders, dump trucks, etc.;
- financial services (5.1%);
- bus and chassis sales (4.7%): world's No. 2 largest manufacturer;
- sales of parts, control systems, and marine and industrial motors (3.8%): for commerce and cruise ships and for industrial applications (irrigation units, lifting trucks, electrical generators, etc.);
- other (1.2%).
Net sales are distributed geographically as follows: Europe (41.1%), North America (30.8%), Asia (11.2%), South America (10.7%), Africa and Oceania (6.2%).
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