It has been about a month since the last earnings report for Paccar (PCAR). Shares have added about 4.4% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Paccar due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
PACCAR Q1 Earnings & Sales Decline Y/Y
PACCAR reported earnings of $1.03 per share for first-quarter 2020, missing the Zacks Consensus Estimate of $1.21, mainly due to lower income and revenues from the company’s trucks, parts and others unit. The reported figure also came in lower than the prior-year quarter’s $1.81.
Consolidated revenues (including trucks and financial services) came in at $5.16 billion, outpacing the Zacks Consensus Estimate of $5.04 billion. The top-line figure, however, came in lower than the year-ago quarter’s $6.49 billion.
During the reported quarter, the company recorded total pre-tax income of $462.2 million, reflecting a decline from the prior-year quarter’s $819.4 million. The company’s net income fell to $359.4 million from the $629 million reported in first-quarter 2019.
SG&A expenses during first-quarter 2020 fell 3.2% to $164 million from the $169.4 million incurred in first-quarter 2019. R&D expenses declined 9.3% to $71 million during the March-end quarter from the first-quarter 2019 number of $78.3 million.
Revenues from trucks, parts and others totaled $4.78 billion in the first quarter, down from the prior-year quarter’s $6.14 billion. The segment’s pre-tax income decreased to $399.1 million from the $716.1 million recorded in the year-ago period.
Revenues in the financial services segment increased to $383.7 million from the year-earlier quarter’s $349.5 million. Pre-tax income declined to $48.3 million from the $874 million reported in the year-ago quarter.
Dividends & Cash Position
During first-quarter 2020, PACCAR announced a regular quarterly cash dividend of 32 cents per share, payable on Jun 2, to stockholders of record as of May 12, 2020.
PACCAR’s cash and marketable debt securities amounted to $4.3 billion as of Mar 31, 2020, compared with $5.2 billion as of Mar 31, 2019.
For the ongoing year, the company has lowered its capex and R&D expenses forecast amid the coronavirus crisis. Capex is now projected at $525-575 million, and R&D expenses are estimated in the $265-$295 million band.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -46.23% due to these changes.
Currently, Paccar has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Paccar has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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