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Why Is Paccar (PCAR) Down 2.8% Since Last Earnings Report?

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It has been about a month since the last earnings report for Paccar (PCAR - Free Report) . Shares have lost about 2.8% in that time frame, outperforming 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 catalysts.

PACCAR's Q4 Earnings Top Estimates

PACCAR reported earnings of $1.47 per share in fourth-quarter 2021, topping the Zacks Consensus Estimate of $1.31 and rising from the year-ago figure of $1.17. Higher-than-expected pre-tax profits across all segments resulted in the outperformance.

Consolidated revenues (including trucks and financial services) came in at $6,686.1 million, up from $5,568.6 million recorded in the corresponding quarter of 2020. Sales from Trucks, Parts and Others came in at $6,295.7 million, beating the consensus mark of $5,383.4 million.

Key Takeaways

Revenues from the Trucks segment totaled $4,961.9 million in the December quarter, higher than the prior-year quarter’s $4,044.8 million. The figure also topped the consensus mark of $4,115 million. The segment’s pre-tax income came in at $192.8 million, falling almost 18% year over year. The reported figure, however, beat the consensus mark of $189 million.

Revenues from the Parts segment totaled $1,312.1 million in the reported quarter, increasing from the year-earlier period’s $1,074.4 million and surpassing the consensus mark of $1,256 million. The segment’s pre-tax income came in at $306.4 million, up from $222.5 million recorded in the year-ago period. The reported figure also topped the consensus mark of $274 million.

Revenues in the Financial Services segment declined to $390.4 million from the year-earlier quarter’s $432.6 million and fell short of the consensus estimate of $446 million. Nonetheless, pre-tax income rose to $134.6 million from $63.8 million, beating the consensus mark of $122 million.

Selling, general and administrative expenses in fourth-quarter 2021 rose to $150.6 million from the prior-year period’s $133.5 million. Research & development (R&D) expenses were $87.1 million in the quarter compared with the year-earlier period’s $71.7 million.

PACCAR’s cash and marketable debt securities amounted to $4,813 million as of Dec 31, 2021, compared with $4,834 million on Dec 31, 2020.

For 2022, capex is projected at $425-$475 million, while R&D expenses are estimated in the $350-$400 million band.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

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 an F. However, 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 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 upward for the stock, and the magnitude of these revisions looks promising. 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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