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Paccar’s Production Build Rates Increase in the Fourth Quarter, Showing Signs of Improvement

Dawit Woldemariam Equity Analyst

Analyst Note

| Dawit Woldemariam |

Narrow-moat Paccar reported solid fourth-quarter results to end 2021. We raised our fair value estimate to $101 from $98 to reflect our more positive view on Paccar’s ability to weather the challenging supply chain environment and rising inflation. In addition, our fair value increase accounts for Morningstar’s updated assumption that a rise in the U.S. corporate tax rate will not occur. Longer-term, we expect Paccar’s tax rate to be approximately 22%. We also raised our sales expectations for Paccar’s parts business. In 2022, we believe the segment can grow sales by 10% year over year, largely due to strong demand for existing trucks.

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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 29% of the Class 8 market share in North America and 16% of the heavy-duty market share in Europe.

777-106th Avenue N.E.
Bellevue, WA, 98004
T +1 425 468-7400
Sector Industrials
Industry Farm & Heavy Construction Machinery
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 26,000