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Paccar (PCAR) Up 7.9% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Paccar (PCAR). Shares have added about 7.9% 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 Q3 Earnings Beat Estimates

PACCAR recorded earnings of $2.34 per share for third-quarter 2023, which surged 59.2% from the year-ago figure. The bottom line also surpassed the Zacks Consensus Estimate of $2.07 per share thanks to higher-than-expected pre-tax profits from Trucks and Parts segments. Consolidated revenues (including trucks and financial services) came in at $8,696.4 million, up from $7,058.9 million in the corresponding quarter of 2022. Sales from Trucks, Parts and Others were $8,232.3 million, which surpassed the Zacks Consensus Estimate of $8,063.2 million.

Key Takeaways

Revenues from the Trucks segment totaled $6,636.4 million in the September quarter, higher than the prior-year quarter’s $5,198.2 million and crossed our estimate of $6,350.5 million. Global truck deliveries came in at 50,100 units. The segment’s pre-tax income was $960.9 million, outpacing our estimate of $776 million and increasing a whopping 123% year over year.

Revenues from the Parts segment totaled $1,582.2 million in the reported quarter, increasing from the year-earlier period’s $1,471.5 million and surpassing our estimate of $1,578 million. The segment’s pre-tax income came in at $412.3 million, up 10.6% on a year-over-year basis, beating our forecast of $391.2 million.

Revenues of the Financial Services segment came in at $464.1 million compared with the year-ago quarter’s $371.9 million and topped our estimate of $420.5 million. Pre-tax income decreased to $133.8 million from $146.2 million reported in the year-ago period and fell short of our projection of $153 million.

Other sales amounted to $13.7 million. Selling, general and administrative expenses in third-quarter 2023 increased to $182.3 million, up from $171 million in the prior-year period. Research & development (R&D) expenses were $103.5 million compared with the year-earlier quarter’s $82.9 million.

PACCAR’s cash and marketable debt securities amounted to $7,440 million as of Sep 30, 2023, compared with $6,158.9 million on Dec 31, 2022. The company declared a quarterly dividend of 27 cents per share, payable on Dec 6 to shareholders as of Nov 15.

Capex and R&D expenses for 2023 are envisioned in the band of $650-$675 million and $410-$420 million, respectively. For 2024, capex and R&D costs are estimated in the range of $675-$725 million and $470-$520 million, respectively.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

VGM Scores

Currently, Paccar has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Paccar has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Paccar belongs to the Zacks Automotive - Domestic industry. Another stock from the same industry, Tesla (TSLA), has gained 10.3% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.

Tesla reported revenues of $23.35 billion in the last reported quarter, representing a year-over-year change of +8.8%. EPS of $0.66 for the same period compares with $1.05 a year ago.

Tesla is expected to post earnings of $0.75 per share for the current quarter, representing a year-over-year change of -37%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.2%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for Tesla. Also, the stock has a VGM Score of D.

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