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Factors to Shape PACCAR's Fate (PCAR) This Earnings Season

·4 min read

PACCAR Inc. PCAR is slated to release first-quarter 2021 results on Apr 27, before the opening bell. The Zacks Consensus Estimate for the quarter’s earnings and revenues is pegged at $1.29 per share and $5.3 billion, respectively.

The trucking giant delivered lower-than-expected earnings in the last reported quarter amid weaker-than-anticipated truck deliveries in the United States and Canada. Over the trailing four quarters, PACCAR beat earnings estimates on two occasions for as many misses, with the average surprise being 8.5%. This is depicted in the graph below:

PACCAR Inc. Price and EPS Surprise

PACCAR Inc. Price and EPS Surprise
PACCAR Inc. Price and EPS Surprise

PACCAR Inc. price-eps-surprise | PACCAR Inc. Quote

Trend in Estimate Revision

The Zacks Consensus Estimate for first-quarter 2021 earnings per share has moved south by 5 cents over the past 30 days. However, the bottom-line projection calls for 25.2% year-over-year growth. The Zacks Consensus Estimate for revenues also suggests a 10.9% increase from the prior-year reported figure of around $4.8 billion.

What Should the Investors Know?

Demand for Class 8 heavy trucks is likely to have been aided by the gradual reopening of economic activities driven by accelerated vaccination drive and fiscal stimulus. PACCAR’s strong reputation for quality and leading brands — namely Kenworth, Peterbilt and DAF — is anticipated to have reflected in company’s first-quarter 2021 performance. Investors should note that the consensus mark for revenues from the Trucks segment is pegged at $4,279 million, indicating a 13.8% increase from the prior-quarter level. Encouragingly, the consensus estimate for the segment’s pretax profit is $275 million, suggesting an improvement from $183 million recorded in the previous quarter.

Persistent growth in aftermarket parts — which are less cyclic in nature and carry high margins — is likely to aid the firm’s first-quarter 2021 results. The Zacks Consensus Estimate for revenues from the Parts segment is pegged at $1,079 million, indicating an increase from $999 million recorded in the corresponding year-ago period. The consensus mark for pretax profit is pegged at $227 million, implying slight growth the year-ago figure of $214 million.

While the above factors are anticipated to boost PACCAR’s to-be-reported quarter’s results, the global chip crunch is likely to have played a spoilsport. Last month, PACCAR announced that the chip shortage has reduced truck deliveries by around 3,000 units in first-quarter 2021, in turn denting earnings to a certain extent.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for PACCAR for the to-be-reported quarter, as it does not have the right combination of the two key ingredients. A combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: PACCAR has an Earnings ESP of -0.91%. This is because the Most Accurate Estimate for earnings is pegged 2 cents lower than the Zacks Consensus Estimate.

Zacks Rank: It currently carries a Zacks Rank of 3.

Stocks Poised to Beat Earnings Estimates

Here are a few companies in the auto space that you may want to consider, as our model shows that these have the right combination to post an earnings beat in the upcoming releases:

Oshkosh Corporation OSK has an Earnings ESP of +0.73% and carries a Zacks Rank #2 at present. The company is scheduled to announce second-quarter fiscal 2021 results on Apr 28.

Dana Incorporated DAN has an Earnings ESP of +1.29% and carries a Zacks Rank #3 at present. The company is set to announce first-quarter 2021 results on Apr 28.

Ford F has an Earnings ESP of +6.16% and carries a Zacks Rank #3 at present. The company is set to announce first-quarter 2021 results on Apr 28.

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