It has been about a month since the last earnings report for Paccar (PCAR). Shares have added about 3.4% in that time frame, outperforming 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 drivers.
PACCAR's Q2 Earnings & Sales Top Estimates, Down Y/Y
PACCAR reported earnings of 43 cents per share for second-quarter 2020, beating the Zacks Consensus Estimate of 31 cents, mainly on higher pre-tax income from the company’s trucks, parts and others, and financial service units. However, the reported figure comes in lower than the prior-year quarter’s $1.78.
Consolidated revenues (including trucks and financial services) came in at $3.06 billion, surpassing the Zacks Consensus Estimate of $2.93 billion. The top-line figure, however, comes in lower than the year-ago quarter’s $6.63 billion.
During the reported quarter, the company recorded total pre-tax income of $184 million, marking a decline from the prior-year quarter’s $814.4 million. The company’s net income fell to $147.7 million from the $619.7 million reported in second-quarter 2019.
SG&A expenses during second-quarter 2020 plunged 30.6% to $120.2 million from the $173.3 million incurred in second-quarter 2019. R&D expenses declined 19.4% to $66.5 million during the June-end quarter from the year-earlier quarter’s $82.5 million.
Revenues from trucks, parts and others totaled $2.7 billion in the second quarter, down from the prior-year quarter’s $6.27 billion. The segment’s pre-tax income significantly decreased to $119.5 million from the $712.3 million recorded in the year-ago period. However, the figure surpassed the Zacks Consensus Estimate of $53 million.
Revenues in the financial services segment decreased to $360.3 million from the year-earlier quarter’s $361.4 million. Pre-tax income declined to $55.5 million from the $80.3 million reported in the year-ago quarter. However, the figure outpaced the Zacks Consensus Estimate of $38.66 million.
Dividends & Cash Position
During second-quarter 2020, PACCAR announced a regular quarterly cash dividend of 32 cents per share, payable on Sep 1, to stockholders of record as of Aug 11, 2020.
PACCAR’s cash and marketable debt securities amounted to $4.2 billion as of Jun 30, 2020, compared with $5.2 billion as of Dec 31, 2019.
The company has reiterated its capex and R&D expenses projection for the ongoing year. 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?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 48.54% due to these changes.
At this time, Paccar has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% 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.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Paccar has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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