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Why Is Paccar (PCAR) Up 0.1% Since Last Earnings Report?

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A month has gone by since the last earnings report for Paccar (PCAR - Free Report) . Shares have added about 0.1% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Paccar due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

PACCAR's Q1 Earnings Beat Estimates, Up Y/Y

PACCAR has reported earnings of $1.35 per share for first-quarter 2021, beating the Zacks Consensus Estimate of $1.27.

Higher-than-anticipated sales in the parts segment resulted in this outperformance. Precisely, the trucking giant recorded sales of $1,160.7 million in the segment, beating the consensus mark of $1,079 million. The bottom line also increased from the prior-year quarter’s earnings of $1.03 per share.

Consolidated revenues (including trucks and financial services) came in at $5.85 billion, up from the $5.16 billion recorded in the corresponding quarter of 2020. Also, sales from the Trucks, Parts and Others unit came in at $5,413.5 million, topping the consensus mark of $5,201 million.

Key Takeaways

Revenues from trucks segment totaled $4,233 million in the March-end quarter, higher than the prior-year quarter’s $3,757.6 million. The figure, however, lagged the consensus mark of $4,279 million. The segment’s pre-tax income came in at $269.5 million, up from the $183.1 million recorded in the year-ago period. The reported figure, nonetheless, missed the consensus mark of $275 million.

Revenues from the parts segment totaled $1,160.7 million in the reported quarter, higher than the year-earlier quarter’s $998.6 million. The segment’s pre-tax income came in at $251.3 million, up from the $214 million recorded in the year-ago period. The reported figure also topped the consensus mark of $227 million.

Revenues in the financial services segment increased to $432 million from the year-earlier quarter’s $383.7 million. Also, pre-tax income rose to $76.4 million from the $48.3 million recorded in the year-earlier period, beating the consensus mark of $64 million.

Selling, general and administrative expenses during first-quarter 2021 declined to $161.1 million from the prior-quarter’s $164 million. Research & Development (R&D) expenses came in at $80.1 million during the first quarter of 2021 compared with the year-earlier quarter’s $71 million.

PACCAR’s cash and marketable debt securities amounted to $4,651.1 million as of Mar 31, 2021, compared with $4834 million as of Dec 31, 2020.

For 2021, capex is projected at $575-$625 million, while R&D expenses are estimated in the $350-$375 million band. 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

VGM Scores

At this time, Paccar has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Paccar has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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