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In December 2018, PACCAR Inc (NASDAQ:PCAR) announced its most recent earnings update, which confirmed that the business gained from a robust tailwind, leading to a double-digit earnings growth of 31%. Below, I’ve presented key growth figures on how market analysts view PACCAR’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Market analysts’ prospects for the coming year seems rather muted, with earnings climbing by a single digit 0.6%. However, the following year seems to show a contrast, with earnings reducing by -10%. This volatility continues into the final year of forecast, with earnings reaching US$2.1b.
While it’s informative understanding the growth year by year relative to today’s value, it may be more valuable evaluating the rate at which the earnings are growing every year, on average. The benefit of this method is that it ignores near term flucuations and accounts for the overarching direction of PACCAR’s earnings trajectory over time, be more volatile. To compute this rate, I put a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is -2.1%. This means, we can anticipate PACCAR will chip away at a rate of -2.1% every year for the next couple of years.
For PACCAR, I’ve put together three fundamental aspects you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is PCAR worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether PCAR is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of PCAR? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.