A month has gone by since the last earnings report for Paccar (PCAR Quick QuotePCAR - Free Report) . Shares have lost about 0.9% in that time frame, underperforming the S&P 500.

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

PACCAR's Q2 Earnings Beat Estimates

PACCAR  reported earnings of $1.41 per share for second-quarter 2021, beating the Zacks Consensus Estimate of $1.38. Higher-than-anticipated sales and profit from Parts and Financial Services segments resulted in this outperformance.

Consolidated revenues (including trucks and financial services) came in at $5.84 billion, up from $3.06 billion recorded in the corresponding quarter of 2020. Sales from Trucks, Parts and Others came in at $5,387.6 million, missing the consensus mark of $5,441 million.

Key Takeaways

Revenues from the trucks segment totaled $4,152.2 million for the June-end quarter, significantly higher than the prior-year quarter’s $1,858.4 million. The figure, however, lagged the consensus mark of $4,299 million. The segment’s pre-tax income came in at $255 million, turning around from a loss of $46.2 incurred in the year-ago period. The reported figure, nonetheless, missed the consensus mark of $286 million.

Revenues from the parts segment totaled $1,211.3 million for the reported quarter, increasing from the year-earlier quarter’s $823.7 million and topping the consensus mark of $1,167 million. The segment’s pre-tax income came in at $265.6 million, up from $151.9 million recorded in the year-ago period. The reported figure also topped the consensus mark of $250 million.

Revenues in the financial services segment increased to $456.3 million from the year-earlier quarter’s $360.3 million and beat the consensus estimate of $437 million. Also, pre-tax income rose to $106.5 million from $55.5 million recorded in the year-earlier period, beating the consensus mark of $77 million.

Selling, general and administrative expenses for second-quarter 2021 rose to $164.4 million from the prior-year quarter’s $120 million. Research & Development (R&D) expenses were $84.4 million for second-quarter 2021 compared with the year-earlier quarter’s $66.5 million.

PACCAR’s cash and marketable debt securities amounted to $4,403.3 million as of Jun 30, 2021 compared with $4834 million on Dec 31, 2020.

The company declared a regular quarterly cash dividend of 34 cents per share, payable on Sep 8, 2021, to shareholders on record as of Aug 18, 2021.

For 2021, capex is projected at $550-$600 million, while R&D expenses are estimated in the $340-$360 million band.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -8.1% due to these changes.

VGM Scores

At this time, Paccar has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. 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.