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PACCAR's Strength in North America Offsets Europe Weakness - Analyst Blog

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On Mar 11, 2015, we issued an updated research report on PACCAR Inc.PCAR . This Zacks Rank #3 (Hold) stock had reported positive earnings surprises in each of the trailing four quarters with an average beat of 3.49%.

PACCAR posted an 18.1% rise in earnings to $1.11 per share in the fourth quarter of 2014 from 94 cents in the same quarter of 2013, surpassing the Zacks Consensus Estimate of $1.09. Revenues increased 11% to a quarterly high of $5.12 billion, surpassing the Zacks Consensus Estimate of $4.96 billion.

PACCAR's revenues increased to a record high of $18.99 billion in 2014 from $17.12 billion in 2013. Record high revenues in the Parts business as well as solid improvement in the Truck and Financial Services businesses contributed to the results. The strong retail sales in the North America heavy truck market also played a significant role in this.

Further, the Parts and Financial Services businesses earned record pre-tax income. As a result, the company's net income for 2014 was the second-highest annual profit recorded in its history.

PACCAR has a strong market share in the U.S. and Canada. Moreover, it is expanding in key non-U.S. markets and deploying capital regularly to boost earnings.

However, PACCAR is witnessing declining sales in Europe. Industry sales in the above 16-ton truck market in Europe amounted to 227,000 units in 2014, down from 241,000 units in 2013. In 2015, the figure is expected to be in the range of 200,000-240,000 units.

Further, PACCAR faces tough competition in the commercial truck markets. Moreover, profits in the Financial Services segment are exposed to lower margins and truck repossessions.

Key Picks from the Sector

Better-ranked automobile stocks include Superior Industries International, Inc. SUP , Tata Motors Ltd. TTM and Wabash National Corp. WNC , all sporting a Zacks Rank #1 (Strong Buy).

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PACCAR INC (PCAR): Free Stock Analysis Report

SUPERIOR INDS (SUP): Free Stock Analysis Report

TATA MOTORS-ADR (TTM): Free Stock Analysis Report

WABASH NATIONAL (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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