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PACCAR's (PCAR) Q3 Earnings & Sales Beat Estimates, Down Y/Y

PACCAR Inc. PCAR reported third-quarter 2020 net earnings per share of $1.11, surpassing the Zacks Consensus Estimate of earnings of 96 cents. This outperformance can be attributed to the rebounding global truck production and deliveries.
 
Markedly, higher-than-expected revenues from the trucks and parts segments resulted in this outperformance. Revenues from the trucks and parts segments came in at $3,504 million and $1,016 million, respectively, beating the Zacks Consensus Estimate of $3,429 million and $954 million. However, the earnings figure comes in lower than the prior-year quarter’s $1.75.

The trucking giant registered consolidated revenues (including trucks and financial services) of $4.94 billion, surpassing the Zacks Consensus Estimate of $4.24 billion. The top-line figure, however, comes in lower than the year-ago quarter’s $6.37 billion.

During the third quarter, the company recorded total pre-tax profit of $489.9 million, marking a decline from the prior-year quarter’s $777.6 million. The company’s net income fell to $385.5 million from the $607.9 million reported in third-quarter 2019.

PACCAR Inc. Price, Consensus and EPS Surprise

PACCAR Inc. Price, Consensus and EPS Surprise

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

Segmental Performance

Revenues from trucks, parts and others totaled $4,538.4 million in the July-September quarter, down from the prior-year quarter’s $6,004.2 million. The segment’s pre-tax income significantly plunged to $428 million from the $690 million recorded in the year-ago period. However, the figure beat the Zacks Consensus Estimate of $364 million.

Revenues in the financial services segment increased to $397.6 million from the year-earlier quarter’s $362.8 million. Nonetheless, pre-tax income declined to $55.5 million from the $66.5 million recorded in the year-earlier period. Meanwhile, the reported figure slightly outpaced the Zacks Consensus Estimate of $55 million.

Costs, Dividends & Cash Position

Selling, general and administrative expenses during third-quarter 2020 plunged 23.7% to $131.7 million from the $172.6 million incurred in third-quarter of 2019. Research & Development (R&D) expenses plummeted 21.3% to $64.7 million during the September-end quarter from the year-earlier quarter’s $82.2 million.

During reported quarter, PACCAR announced a regular quarterly cash dividend of 32 cents per share, payable on Dec 1, to stockholders of record as of Nov 10, 2020.

PACCAR’s cash and marketable debt securities amounted to $4,413.2 million as of Sep 30, 2020, compared with $5,169.4 million as of Dec 31, 2019.

Outlook

PACCAR has reiterated its capital expenditure (Capex) and R&D expenses projection for the ongoing year. Capex is now projected at $570-$600 million, and R&D expenses are estimated in the $270-$280 million band. The company estimates that it will invest $575-$625 million in capital projects and $330-$360 million in R&D expenses next year.

Zacks Rank & Other Stocks to Consider

PACCAR currently carries a Zacks Rank #2 (Buy). Shares of the company have appreciated 15.1%, year to date, significantly underperforming the industry’s rally of 140.2%.
 
Some other top-ranked stocks in the same industry include IAA Inc IAA, Polaris Inc PII and Ford Motor F. Ford currently flaunts a Zacks Rank #1 (Strong Buy), while Polaris and IAA hold a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

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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.

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