• Sun. Jan 29th, 2023

Bull of the Day: PACCAR (PCAR)

ByZacks

Nov 10, 2022
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PACCAR PCAR is a $35 billion manufacturer of heavy-duty trucks for global markets and has substantial manufacturing exposure to light/medium trucks.

It also designs and manufactures diesel engines and other powertrain components for use in its own products and for sale to third party manufacturers of trucks and buses. Besides supplying aftermarket parts, PACCAR also offers finance and leasing services.

PACCAR Trucks distributes premium trucks under the Kenworth and Peterbilt nameplates in the United States and Canada. The company operates in the European light/medium market under the DAF nameplate through its wholly owned subsidiary, Leyland, in the U.K.

Strong Quarter Boosts Estimates

PACCAR’s earnings of $2.21 per share for third-quarter 2022 beat the Zacks Consensus Estimate of $2.01 and rocketed 109% from the year-ago figure. Higher-than-expected pretax income from Trucks, Parts and Financial Services segments resulted in the outperformance.

Consolidated revenues (including trucks and financial services) came in at $7.059 billion, up from $5.146B recorded in the corresponding quarter of 2021. Sales from Trucks, Parts and Others were $6.687B, which marginally missed the consensus mark of $6.692B.

Responding to this strength, analysts raised this year’s consensus from EPS of $7.73 to $8.15, based primarily on the big quarter beat.

What’s more important is that they boosted next year’s EPS consensus from $8.04 to $8.36.

Key Quarter Takeaways

Revenues from the Trucks segment totaled $5.198B in the September quarter, higher than the prior-year quarter’s $3.453B. The figure, however, missed the consensus mark of $5.313B. The segment’s pre-tax income was $430.5 million, surpassing the consensus mark of $385 million and increasing a whopping 438% year over year.

Revenues from the Parts segment totaled $1.472B in the reported quarter, increasing from the year-earlier period’s $1.260B and surpassing the consensus mark of $1.431B. The segment’s pre-tax income came in at $374 million, up 32.6% on a yearly basis. The metric also outpaced the consensus mark of $353 million.

Revenues of the Financial Services segment declined to $372 million from the year-earlier quarter’s $409 million but came in line with the consensus estimate. Pre-tax income rose to $146 million from $120 million and came higher than the consensus mark of $142 million.

Drivers of Growth

The reasons that have PCAR pushing over 21% topline growth this year to cross $26 billion — and stunning 53% EPS growth — are the combination of rising commodity prices, demand for vehicles, and robust economic activity globally.

While the stock sits near 52-week highs, it’s still quite the value, trading at only 1.3 times sales. And the P/E sits comfortably under 13X.

And as they complete over 5 years of partnership with NVIDIA NVDA in autonomous driving systems and intelligent logistics, PACCAR is poised to remain a leader in transportation across the globe.

Disclosure: I own NVDA shares for the Zacks TAZR Trader portfolio.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



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