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PACCAR Inc PCAR

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Paccar Reports Solid Q2 Earnings Largely Due to Strong Freight Demand and Parts Sales

Dawit Woldemariam Equity Analyst

Analyst Note

| Dawit Woldemariam |

Paccar posted solid second-quarter results, with reported sales reaching $5.3 billion (excluding financial services), showing the continued strength in freight demand. Paccar’s parts business was the stand-out, benefiting from strong truck utilization. This led management to raise its 2021 guidance for part sales. The expected range now stands between 20% to 22% for the year, up from 15% to 18% from the first quarter’s guidance. We raised our near-term revenue expectations to account for greater parts sales growth. However, this tailwind was partially offset by the impact of Morningstar’s probability-adjusted U.S. corporate tax rate assumption of 26% starting in 2022. Taking these factors into consideration, our fair value estimate increased slightly to $98 (up from $97). 

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Company Profile

Business Description

Paccar is a leading manufacturer of medium- and heavy-duty trucks under the premium brands Kenworth and Peterbilt, which are primarily sold in the NAFTA region and Australia, and DAF trucks, which are sold in Europe and South America. Its trucks are sold through over 2,200 independent dealers globally. Paccar Financial Services provides retail and wholesale financing for customers and dealers, respectively. The company commands approximately 30% of the Class 8 market share in North America and 16% of the heavy-duty market share in Europe.

Contact
777-106th Avenue N.E.
Bellevue, WA, 98004
T +1 425 468-7400
Sector Industrials
Industry Farm & Heavy Construction Machinery
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 26,000

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