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Is PACCAR (PCAR) Poised to Surpass Q3 Earnings Estimates?

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PACCAR Inc. (PCAR - Free Report) is slated to release third-quarter 2020 results on Oct 20, before the opening bell. The Zacks Consensus Estimate for the quarter’s earnings and revenues is pegged at 96 cents per share and $4.23 billion, respectively.

The trucking giant delivered better-than-expected results in the last reported quarter on higher pre-tax income from the company’s trucks, parts and others, as well as financial service units. Over the trailing four quarters, PACCAR beat earnings estimates on three occasions and missed once, with the average surprise being 8.5%. This is depicted in the graph below:

PACCAR Inc. Price and EPS Surprise

PACCAR Inc. Price and EPS Surprise

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

Trend in Estimate Revision

The Zacks Consensus Estimate for third-quarter 2020 earnings per share has moved north by 6 cents over the past seven days. However, the figure calls for a 45.1% year-over-year slump. The Zacks Consensus Estimate for revenues also suggests a 29.5% decline from the prior-year reported figure of around $6 billion.

Earnings Whispers

Our proven model predicts an earnings beat for PACCAR for the to-be-reported quarter, as it has the right combination of the two key ingredients. A combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: PACCAR has an Earnings ESP of +5.52%. This is because the Most Accurate Estimate for loss is pegged 5 cents higher than the Zacks Consensus Estimate.

Zacks Rank: It carries a Zacks Rank of 2 currently.

Factors at Play

After earnings and revenues of PACCAR took a severe hit in second-quarter 2020 amid coronavirus woes, things are likely to have improved. Amid gradual recovery of the industry during the third quarter, demand for Class 8 trucks seems to have risen from the prior quarter. PACCAR’s strong reputation for quality and leading brands — namely Kenworth, Peterbilt and DAF — is anticipated to have aided the company’s performance in the third quarter of 2020.

As such, the Zacks Consensus Estimate for revenues from the Trucks segment is pegged at $3,429 million, indicating a 75% increase from the prior-quarter level. Encouragingly, the consensus mark for the segment’s pretax profit is $261 million, suggesting a significant turnaround from the prior quarter’s loss of $46.2 million.

Continued growth in aftermarket parts — which are less cyclic in nature and carry high margins — is also likely to aid the firm’s third-quarter results. The Zacks Consensus Estimate for revenues from the Parts segment is pegged at $954 million, implying an increase from the previous quarter’s sales of $824 million. The consensus mark for the segmental profit stands at $162 million, pointing to growth from $152 million recorded in second-quarter 2020.

Other Stocks With Favorable Combination

PACCAR is not the only auto company looking up this earnings season. Here are some other companies within the same space, which, according to our model, also have the right combination of elements to post an earnings beat in the to-be-reported quarter:

Genuine Parts Company (GPC - Free Report) has an Earnings ESP of +3.27% and carries a Zacks Rank #1 at present. The company is slated to release third-quarter 2020 earnings on Oct 22.

Autoliv (ALV - Free Report) has an Earnings ESP of +2.52% and currently carries a Zacks Rank #3. The company is slated to release third-quarter 2020 earnings on Oct 23.

Gentex Corporation (GNTX - Free Report) has an Earnings ESP of +8.37% and carries a Zacks Rank #2 currently. The company is slated to release third-quarter 2020 earnings on Oct 23.

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