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Bellevue, Washington-based PACCAR Inc (PCAR) designs, manufactures, and distributes light, medium, and heavy-duty commercial trucks. Valued at a market cap of almost $57.8 billion, the company also designs and manufactures diesel engines and other powertrain components for use in its own products and sale to third-party manufacturers of trucks and buses.
Companies worth $10 billion or more are typically classified as “large-cap stocks,” and PCAR fits the label perfectly, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the farm & heavy construction machinery industry. The company stands out for its strong market position, advanced technology investments, and commitment to innovation in autonomous driving, electric vehicles, and fuel-efficient powertrains. With a well-established global supply chain and dealership network, PACCAR ensures extensive aftermarket support, enhancing customer loyalty.
Despite its notable strength, this truck and powertrain components manufacturer has slipped 12.3% from its 52-week high of $125.50, reached on Mar. 28, 2024. Moreover, it has declined 5% over the past three months, slightly underperforming the Industrial Select Sector SPDR Fund’s (XLI) 4.5% downtick over the same time frame.
However, so far this year, shares of PCAR are up 5.8%, outpacing XLI’s 1.9% gain on a YTD basis. Yet, in the longer term, PCAR has tumbled 3.7% over the past 52 weeks, lagging behind XLI’s 9.5% return.
Since March, PCAR has started trading above its 200-day and 50-day moving averages.
On Jan. 28, PCAR shares declined 2.4% following its Q4 earnings release, which fell short of market expectations. The company posted net income of $1.66 per share, marking a 38.5% decline from the same quarter last year and falling short of Wall Street’s expectations of $1.68. Revenue was also disappointing, coming in at $7.4 billion, down 14.3% year-over-year and missing forecasts by 1.1%.
The company’s performance was impacted by unfavorable foreign exchange rates, which reduced net income by approximately $20 million. Additionally, declines across PACCAR’s core business segments, including trucks, parts, and other revenue streams, further weighed on its results.
Nevertheless, PCAR has certainly performed better than its rival, Oshkosh Corporation’s (OSK), which declined 13.8% over the past 52 weeks and gained 3.4% on a YTD basis.
Despite PCAR’s recent underperformance, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from the 15 analysts covering it, and the mean price target of $118.78 suggests a 7.9% premium to its current levels.
