How PACCAR (PCAR) is Placed Ahead of Q4 Earnings Release
PACCAR Inc. PCAR is slated to release fourth-quarter 2021 results on Jan 25, before the opening bell. The Zacks Consensus Estimate for the quarter’s earnings and revenues is pegged at $1.31 per share and $5.38 billion, respectively.
The trucking giant delivered lower-than-expected earnings in the last reported quarter amid weaker-than-anticipated sales and profits from the Trucks segment.
Over the trailing four quarters, PACCAR beat earnings estimates twice for as many misses, with the average negative surprise being 1.98%. This is depicted in the graph below:
PACCAR Inc. Price and EPS Surprise
PACCAR Inc. price-eps-surprise | PACCAR Inc. Quote
Trend in Estimate Revisions
The Zacks Consensus Estimate for fourth-quarter 2021 earnings per share has moved south by a penny over the past seven days. Nonetheless, the bottom-line projection calls for a 12% and 21.3% increase on a yearly and sequential basis, respectively. The Zacks Consensus Estimate for revenues suggests a 4.8% increase from the prior-year period and 13.6% growth from the last reported quarter.
Factors to Note
PACCAR’s strong reputation for quality and leading brands — Kenworth, Peterbilt, and DAF — as well as rising demand for Class 8 heavy trucks are anticipated to have aided fourth-quarter sales. Consequently, the consensus mark for revenues from the Trucks segment is pegged at $4,115 million, indicating an improvement from $4,045 million generated in the year-ago period. Nonetheless, the consensus estimate for the segment’s pretax profit is $189 million, suggesting a decline from $234 million recorded in the prior-year quarter.
Persistent growth in aftermarket parts — which are less cyclic in nature and carry high margins — is likely to have supported the firm’s quarterly performance. The Zacks Consensus Estimate for revenues from the Parts segment is pegged at $1,256 million, indicating an increase from $1,074 million recorded in the corresponding year-ago period. The consensus mark for pretax profit is $274 million, suggesting growth from the year-ago figure of $223 million.
While potential revenue growth from Trucks and Parts segments is likely to buoy PACCAR’s results, manufacturing inefficiencies associated with supply-chain disruptions are anticipated to have played spoilsports. PACCAR is likely to have bore the brunt of the rising commodity prices, which, in turn, may have clipped gross margins. A tough labor market and logistical challenges are also likely to reflect negatively on Q4 earnings. Additionally, high R&D costs to support investments in innovative products and technology might have dented operating profits to some 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 -2.80%. This is because the Most Accurate Estimate is pegged 3 cents below the Zacks Consensus Estimate.
Zacks Rank: It currently carries a Zacks Rank of 3.
Stocks to Consider
Here are some automakers, which, according to our model, have the right combination of elements to post an earnings beat for the quarter to be reported:
Tesla TSLA has an Earnings ESP of +6.30% and a Zacks Rank #1. The stock is set to report fourth-quarter 2021 earnings on Jan 26.
The Zacks Consensus Estimate for Tesla’s to-be-reported quarter’s earnings and revenues is pegged at $2.02 per share and $15.93 billion, respectively. TSLA surpassed earnings estimates on three occasions and missed on the other, with the average surprise being 25.4%
General Motors GM has an Earnings ESP of +12.02% and a Zacks Rank #2. The stock is set to report fourth-quarter 2021 earnings on Feb 1.
The Zacks Consensus Estimate for General Motors’ to-be-reported quarter’s earnings and revenues is pegged at $1.04 per share and $29.35 billion, respectively. Encouragingly, GM surpassed earnings estimates in the last four quarters, with an average of 46.5%.
Ford F has an Earnings ESP of +8.00% and a Zacks Rank #1. The stock is set to report fourth-quarter 2021 earnings on Jan 3.
The Zacks Consensus Estimate for Ford’s to-be-reported quarter’s earnings and revenues is pegged at 38 cents per share and $35.96 billion, respectively. Encouragingly, F surpassed earnings estimates in the last four quarters, with an average of 335.6%.
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