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PACCAR (PCAR) Q4 Earnings: Is a Surprise in the Cards?

PACCAR Inc.PCAR is set to report fourth-quarter 2016 results before the market opens on Jan 31. In the last quarter, the company posted a negative earnings surprise of 1.01%. Let's see how things are shaping up for this announcement.

Factors Influencing this Quarter

PACCAR is well positioned in the key non-U.S. markets due to its strategic investments. The company continues to expand its global network of strategically located parts distribution centers. These factors should drive fourth-quarter earnings.

Moreover, in 2016, industry sales in Europe's above 16-ton truck market are expected in the range of 290,000-300,000 units, higher than 269,000 units sold in 2015. The market is benefiting from positive economic growth and increased freight activity. Higher industry sales should translate into higher sales for the company as long as it maintains or increases its market share.

However, Class 8 industry retail sales in the U.S. and Canada are projected in the range of 215,000-225,000 units for 2016, lower than the prior projection of 220,000-240,000 units as well as 278,000 units sold in 2015. This indicates the possibility of a year-over-year decline in the fourth quarter as well, which may adversely impact the company's results.

Earnings Whispers

Our proven model does not conclusively show that PACCAR is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below:

Zacks ESP: The Earnings ESP for PACCAR is -3.45% because the Most Accurate estimate is 84 cents while the Zacks Consensus Estimate stands at 87 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

PACCAR Inc. Price and EPS Surprise

PACCAR Inc. Price and EPS Surprise | PACCAR Inc. Quote

Zacks Rank: PACCAR carries a Zacks Rank #3 which increases the predictive power of ESP. However, the company's negative ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Price Performance

PACCAR has outperformed the Zacks categorized Auto Manufacturers-Domestic industry in the last one year driven by benefits from a sizeable market share in the U.S. and Canada along with active capital deployment. The company's expansion plans as well as rising European sales also drove the share price. The company's shares have increased 43.7% over a year, compared with a 31.9% gain recorded by the industry.

Stocks to Consider

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Wabash National Corporation WNC has an Earnings ESP of +2.63% and a Zacks Rank #2. The company is slated to report fourth-quarter and full-year 2016 results on Jan 31. You can see the complete list of today's Zacks #1 Rank stocks here.

Autoliv Inc. ALV has an Earnings ESP of +3.85% and a Zacks Rank #3. The company's fourth-quarter and full-year 2016 financial results are scheduled for release on Feb 2.

American Axle & Manufacturing Holdings, Inc. AXL has an Earnings ESP of +2.94% and a Zacks Rank #3. The company is expected to report fourth-quarter and full-year 2016 financial numbers on Feb 10.

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PACCAR Inc. (PCAR): Free Stock Analysis Report

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Wabash National Corporation (WNC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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