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PACCAR (PCAR) Q3 Earnings & Revenues Top Estimates, Rise Y/Y

Zacks Equity Research

PACCAR Inc. PCAR has reported earnings of $1.75 per share for third-quarter 2019, which beat the Zacks Consensus Estimate of $1.62. In third-quarter 2018, the company’s earnings per share were $1.55. This year-over-year improvement can be attributed to a record truck delivery and aftermarket parts sales.

Revenues from trucks, parts and others came in at of $6,004 million, which beat the Zacks Consensus Estimate of $5,864 million. Moreover, the top line grew from the prior-year quarter figure of $5,417 million.  

Consolidated revenues (including trucks and financial services) totaled $6.37 billion in the quarter, as against $5.76 billion in the year-ago period.

The company’s net income rose to $607.9 million from $545.3 million in third-quarter 2018.

PACCAR Inc. Price, Consensus and EPS Surprise

PACCAR Inc. Price, Consensus and EPS Surprise

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

Q3 Highlights

Pre-tax income from the Truck, Parts and Other segment grew to $690 million from $573.6 million recorded a year ago. However, income from the Financial Services segment declined to $66.5 million from $78.8 million a year ago.

Total pre-tax income rose to $777.6 million from $668.8 million in the year-ago quarter.

During the reported quarter, the company recorded gross margin of 14.9% on good pricing, production efficiency and rigorous cost controls.

SG&A expenses during third-quarter 2019 rose 12.4% to $172.6 million from $153.5 million in third-quarter 2018. R&D expenses grew 12.7% to $82.2 million in the reported quarter from $72.9 million in third-quarter 2018.

Share Repurchase & Cash Position

During the quarter under review, the company repurchased 832,800 shares of its common stock for $53.6 million. As of Sep 30, 2019, it had shares of $430.5 million remaining for repurchase under the current $500-million program.

PACCAR’s cash and marketable debt securities amounted to $4.64 billion as of Sep 30, 2019, compared with $4.30 billion as of Dec 31, 2018.

Outlook

For 2019, retail unit sale for Class 8 trucks in the United States and Canada is anticipated to be 310,000-320,000 while for 2020, it is estimated to be 230,000-260,000.

Zacks Rank & Stocks to Consider

PACCAR currently carries a Zacks Rank #3 (Hold).

A few better better-ranked stocks in the Auto-Tires-Trucks sector are BRP Inc DOOO, Sonic Automotive, Inc SAH, and  Lithia Motors, Inc LAD, currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

BRP has an expected earnings growth rate of 18.4% for 2019. The company’s shares have gained 67.3% year to date.

Sonic Automotive has an estimated earnings growth rate of 32.7% for 2019. Its shares have gained 118% year to date.

Lithia Motors has an estimated earnings growth rate of 13.2% for 2019. Its shares have gained 77.7% year to date.

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