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PACCAR (PCAR) Up 17.4% Since Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for PACCAR Inc. (PCAR - Free Report) . Shares have lost about 7.9% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? 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 Q2 Earnings Beat Estimates, Revenues Top

PACCAR’s second-quarter 2017 earnings were $1.06 per share down from $1.37 recorded in the year-ago quarter. Earnings surpassed the Zacks Consensus Estimate of $0.99. Results benefited from rising truck production in North America, a strong European market and global higher market sales.

Net sales and financial services revenues increased to $4.7 million from $4.41 million recorded in second-quarter 2016. Thus revenues in this reported quarter topped the Zacks Consensus Estimate of $4.27 billion.

Segment Results

Revenues from the Truck, Parts and Other segment increased to $4.4 billion in second-quarter 2017 from $4.12 billion in the year-ago quarter. The segment’s pre-tax income declined to $467.3 million, in comparison to a gain of $562.5million, recorded a year-ago.

Revenues in the Financial Services segment (comprising a portfolio of 180,000 trucks and trailers, with total assets of $12.69 billion) rose to $306.3 million. Pre-tax income in the segment declined to $63 million from $77.3 million in the year-ago quarter.

Financial Position

PACCAR’s cash and marketable debt securities amounted to $3 billion as of Jun 30, 2017 compared with $2.9 billion as of Dec 31, 2016.

Guidance

PACCAR increased sales expectations in the above 16-ton truck market in Europe to 290,000-310,000 units from the previous guidance of 270,000−300,000 units, for 2017.

The company also increased the Class 8 industry retail sales estimates in the U.S. and Canada, to be within 200,000-220,000 compared with the previous expectation of 190,000-220,000 vehicles, for 2017.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the past month as none of them issued any earnings estimate revisions.

VGM Scores

Currently, the stock has a nice Growth Score of B, though it is lagging a lot on the momentum front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second 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.

Zacks' style scores indicate that the company's stock is suitable for value and growth investors.

Outlook

The stock has a Zacks Rank #3 (Hold). We are expecting inline return from the stock in the next few months.




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