Vroom, vroom! Get ready to start your engines, automotive investors. The remains of Volvo (NASDAQ:VOLV) -- the truckmaker left over after Ford (NYSE:F) bought the car division in 1999 -- reports its first-quarter 2007 earnings bright and early Friday morning. Or really, really late Thursday night. It all depends on how much of a night owl you are -- the news is due out at 2 a.m.

What analysts say:

  • Buy, sell, or waffle? Thirty-one analysts ride herd on Volvo. Eight of them rate it a buy, 11 more a hold, and a full dozen vote sell.
  • Revenues and earnings. Here in the U.S., no analyst has publicized an estimate of Volvo's revenues for the quarter. That didn't keep one brave soul from guessing that earnings will come in at $1.41 per share, however, up 12% from last year.

What management says:
There were three big news items at Volvo this quarter.

First and foremost, Volvo announced that it has completed its acquisition of Nissan (NASDAQ:NSANY) subsidiary Nissan Diesel, in connection with which Volvo decided to delay its Q1 report (which had been expected back in April) until this Friday.

Second, the firm announced in April its intention to expand manufacturing operations in Russia, by building a factory in Kaluga capable of producing 10,000 Volvo trucks and 5,000 Renault trucks per year. This represents a 30-fold expansion of Volvo's current Russian manufacturing capacity. The new factory is expected to be up and running by 2009.

Last is the firm's purchase of the "road development equipment" division of Ingersoll Rand (NYSE:IR). Volvo paid $1.3 billion to acquire IR's stable of soil and asphalt compactors, asphalt pavers, milling machines, telescopic handlers, and rough terrain forklifts. According to Volvo, IR sold $864 million worth of this stuff last year, earning an operating profit of $101 million for its trouble -- an 11.7% margin.

What management does:
As you'll see below, this third item at least promises to benefit Volvo by further boosting its operating margins, which have risen on a rolling basis in each succeeding quarter over the past year.

Margins

9/05

12/05

3/06

6/06

9/06

12/06

Gross

22.5%

22.4%

22.6%

23%

22.8%

23.1%

Operating

7.9%

7.3%

7.6%

7.9%

8.1%

8.6%

Net

5.9%

5.4%

5.5%

5.7%

6%

6.3%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
The deal with Ingersoll Rand looks like a win-win for both parties. The seller receives payment of 1.5 times sales -- a premium to the entire company's 1.2 price-to-sales ratio. In exchange for this princely sum, all IR loses is a division that earns it a below-average profit margin (IR as a whole makes an operating margin of 12.3%).

For its part, Volvo pays just a fraction of its own price-to-sales ratio (6 times sales) for a unit that earns an above-average operating margin (when compared to its companywide operating margin of 8.6%). Ain't capitalism grand?

Stop the truck and park before reading:

Fool contributor Rich Smith does not own shares of any company named above. Nissan is a Global Gains selection. The Motley Fool has a disclosure policy.