It has been about a month since the last earnings report for Paccar (PCAR). Shares have lost about 8.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Paccar due for a breakout? 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 Q4 Earnings and Sales Down Y/Y
PACCAR reported earnings of $1.53 per share for fourth-quarter 2019, beating the Zacks Consensus Estimate of $1.50, mainly aided by higher income and revenues from the company’s parts unit. However, the reported figure came in lower than the prior-year quarter’s $1.65.
Consolidated revenues (including trucks and financial services) came in at $6.12 billion, outpacing the Zacks Consensus Estimate of $5.55 billion. The top-line figure, however, came in lower than the year-ago quarter’s $6.28 billion.
During the reported quarter, the company recorded total pre-tax income of $687.8 million, reflecting a decline from the prior-year quarter’s $752.4 million. The company’s net income fell to $531.3 million from the $578.1 million reported in fourth-quarter 2018.
SG&A expenses during fourth-quarter 2019 rose 8.3% to $148 million from the $136.6 million incurred in fourth-quarter 2018. R&D expenses flared up 3.9% to $83.6 million in the December-end quarter from the fourth-quarter 2018 number of $80.5 million.
Revenues from trucks, parts and others totaled $5.71 billion in the fourth quarter, up from the prior-year quarter’s $5.93 billion. The segment’s pre-tax income decreased to $599.6 million from the $645.3 million recorded a year ago.
Revenues in the financial services segment increased to $406.3 million from the year-earlier quarter’s $347 million. Pre-tax income declined to $68.1 million from the $87.2 million reported in the year-ago quarter.
Share Repurchase & Cash Position
During 2019, the company repurchased 1.68 million shares of its common stock for $110.2 million. As of Dec 31, 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 $5.17 billion as of Dec 31, 2019, compared with $4.30 billion as of Dec 31, 2018.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
At this time, Paccar has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. 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 B. 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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