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Tuesday, PACCAR (NASDAQ:PCAR), a $56.47 billion market cap machinery giant, is expected to face downward pressure following the release of their fourth-quarter 2024 earnings. Citi analyst Kyle Menges maintained a Neutral rating and a price target of $115.00 on the company’s stock. PACCAR reported adjusted earnings per share (EPS) of $1.66, which fell short of both Citi’s projection of $1.75 and the consensus estimate of $1.69. According to InvestingPro analysis, PACCAR currently trades at a P/E ratio of 12.22, suggesting relatively modest valuations despite its market position.
The company’s revenue also did not meet expectations, coming in approximately 5% below what analysts had forecasted. This was primarily due to truck deliveries totaling 43.9 thousand, slightly below the estimated 44.6 thousand. The lower figure was attributed to U.S. and Canadian deliveries not meeting anticipated numbers. Menges noted that there seemed to be some destocking of class 8 sleepers during the quarter, as suggested by industry data and discussions with dealers. InvestingPro data reveals that while near-term challenges exist, PACCAR maintains robust financial health with a strong current ratio of 5.34 and has impressively maintained dividend payments for 55 consecutive years.
PACCAR’s gross margin for the quarter was 15.9%, aligning with Citi’s estimates and at the upper end of the company’s own forecast range of 15.5% to 16%. However, according to Menges, this margin was slightly below what investors were expecting. For deeper context, InvestingPro’s comprehensive analysis shows the company’s trailing twelve-month gross margin stands at 18.49%, with additional metrics and insights available in the Pro Research Report, part of InvestingPro’s coverage of 1,400+ US stocks.
Despite the underwhelming delivery figures in the U.S. and Canada, PACCAR has raised its industry retail sales guidance for the South American class 8 market by 5,000 units at the midpoint. Nevertheless, the company has not altered its retail sales expectations for the U.S., Canadian, and European markets. Menges anticipates that PACCAR’s stock will experience a decline due to the weaker-than-expected U.S. and Canadian deliveries and the unchanged sales outlook for these regions. Based on InvestingPro’s Fair Value analysis, the stock appears to be trading above its intrinsic value, though the platform identifies several additional strengths through its 10+ ProTips and comprehensive financial metrics.
In other recent news, PACCAR, a key machinery industry player, has had its stock maintained at a Market Perform rating by Raymond (NSE:RYMD) James, as reported by analyst Tim Thein. The company’s Q4 earnings per share (EPS) came in at $1.66, aligning with Raymond James’ estimate, and total gross margins reached 15.9%. Thein noted that global truck deliveries increased, totaling 43,900 units, and Parts margins saw a sequential improvement, hitting 25.7% pre-tax.
However, PACCAR’s Q4 earnings fell short of analyst expectations, with the company reporting revenues of $7.91 billion, surpassing projections of $7.57 billion, but a decrease of 12.9% YoY. Net income also fell to $872.0 million from $1.42 billion in Q4 2023. For the full year 2024, PACCAR reported a revenue decrease of 4.2%, down to $33.66 billion from $35.13 billion in 2023, and a decrease in annual net income to $4.16 billion from $4.60 billion the previous year.
Despite these developments, PACCAR continues to demonstrate stability with a 55-year track record of consecutive dividend payments and strong return metrics over the past decade. In terms of future expectations, Thein anticipates a modest sequential improvement in first-quarter deliveries and a gross margin between 16% and 16.5% for the upcoming quarter. PACCAR has also announced plans to invest in capital projects and research and development in 2025.
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