A month has gone by since the last earnings report for Paccar (PCAR Quick QuotePCAR - Free Report) . Shares have added about 1.2% in that time frame, outperforming 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 catalysts.

PACCAR Q2 Earnings Beat Estimates on Record Revenues

PACCAR Inc.’s earnings of $2.33 per share for second-quarter 2023 beat the Zacks Consensus Estimate of $2.14 and rocketed 70% from the year-ago figure.

Consolidated revenues (including trucks and financial services) came in at $8,881 million, up from $7,158.7 million recorded in the corresponding quarter of 2022. Sales from Trucks, Parts and Others were $8,441.3 million, which surpassed the Zacks Consensus Estimate of $8,280 million.

Key Takeaways

Revenues from the Trucks segment totaled $6,827.5 million in the June quarter, higher than the prior-year quarter’s $5,336.4 million. The figure also crossed our estimate of $5,756.4 million due to higher-than-expected demand for trucks with high fuel efficiency. The segment’s pre-tax income was $948.3 million, outpacing our estimate of $868.6 million and increasing a whopping 125% year over year.

Revenues from the Parts segment totaled $1,598.9 million in the reported quarter, increasing from the year-earlier period’s $1,434.7 million and surpassing our estimate of $1,587.7 million. The segment’s pre-tax income came in at $419.3 million, up 18.7% on a year-over-year basis. The metric, however, lagged our estimate of $562.6 million.

Revenues of the Financial Services segment came in at $439.8 million compared with the year-ago quarter’s $372.5 million and topped our estimate of $273.3 million due to its high-quality portfolio. Pre-tax income increased to $144.7 million from $144.4 million and came higher than our forecast of $103 million, thanks to its high-quality portfolio and good used truck profitability.

Other sales amounted to $14.9 million, surpassing our estimate of $14.5 million. Pretax profit increased to $56.2 million, up from $2.3 million.

Selling, general and administrative expenses in second-quarter 2023 increased to $181.9 million, up from $176.8 million in the prior-year period. Research & development (R&D) expenses were $101.3 million compared with the year-earlier quarter’s $80.4 million.

PACCAR’s cash and marketable debt securities amounted to $6,618.4 million as of Jun 30, 2023 compared with $6,158.9 million on Dec 31, 2022. The company hiked its dividend by 8% to 27 cents per share, up from 25 cents per share in the prior quarter.

Capex and R&D expenses for 2023 are envisioned in the band of $625-$675 million and $400-$430 million, respectively.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

Currently, 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Paccar has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.