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PACCAR Inc (PCAR), headquartered in Bellevue, Washington, designs, manufactures, and provides customer support of premium light-, medium- and heavy-duty trucks under the Kenworth, Peterbilt, and DAF nameplates. Valued at $49.46 billion by market cap, the company also designs and manufactures advanced diesel engines, provides financial services, information technology, and distributes truck parts.
Shares of this leading manufacturer of heavy-duty trucks have underperformed the broader market considerably over the past year. PCAR has gained 9.1% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 15.9%. In 2024, PCAR stock is down 6.3%, while the SPX is up 8.8% on a YTD basis.
Narrowing the focus, PCAR’s underperformance looks less pronounced compared to the S&P 500 Industrial Sector SPDR (XLI). The exchange-traded fund has gained about 10.7% over the past year. The ETF’s 5.1% returns on a YTD basis outshine the stock’s losses over the same time frame.
On Jul. 23, PCAR shares closed down more than 10% after reporting its Q2 results. Its EPS of $2.13 fell short of Wall Street expectations of $2.15. The company’s revenue was $8.77 billion, down 1.2% year over year. Its adjusted revenue was $8.26 billion, falling short of Wall Street forecasts of $8.31 billion. PCAR’s global truck deliveries were 48,400 units. The company’s cash generated from operations stood at $440 million.
PCAR’s management said that it sees a decline in the Class 8 truck market in the U.S. and Canada. It projects a reduction from 305,000 trucks in 2023 to around 260,000 trucks in 2024, representing a 15% decline.
For the current fiscal year, ending in December, analysts expect PCAR’s EPS to decline 15.6% to $8.11 on a diluted basis. The company’s earnings surprise history is mixed. It beat the consensus estimate in three of the last four quarters while missing the forecast on another occasion.
Among the 17 analysts covering PCAR stock, the consensus rating is a “Moderate Buy.” That’s based on five “Strong Buy” ratings, one “Moderate Buy,” 10 “Holds, and one “Strong Sell.”
This configuration has been consistent over the past three months.
Recently, Deutsche Bank analyst Nicole Deblase maintained a “Buy” rating on PCAR stock but lowered the firm’s price target to $109 from $121, implying a potential upside of 15.5% from current levels.
The mean price target of $113.21 represents a 20% premium to PCAR’s current price levels. The Street-high price target of $139 suggests an ambitious upside potential of 47.3%.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
