PACCAR (PCAR) Misses Q3 Earnings Estimates, Guides 2017

PACCAR Inc.’s (NASDAQ:PCAR) third-quarter 2016 earnings decreased to $346.2 million or 98 cents per share from $431.2 million or $1.21 per share recorded in the year-ago quarter. Earnings per share marginally missed the Zacks Consensus Estimate of 99 cents.

Revenues declined 13% year over year to $3.95 billion, missing the Zacks Consensus Estimate of $4.13 billion

Net sales and financial services revenues fell to $4.25 billion from $4.85 billion in the third quarter of 2015.

Segment Results

Revenues from the Truck, Parts and Other segment decreased to $3.95 billion in the third quarter of 2016 from $4.55 billion in the year-ago quarter. The segment reported pretax income of $415.4 million compared with $525.4 million a year ago.

Revenues in the Financial Services segment (comprising a portfolio of 176,000 trucks and trailers, with total assets of $12.37 billion) fell 1.6% to $296.2 million. Pre-tax income in the segment declined to $71 million from $92.9 million in the year-ago quarter.

Financial Position

PACCAR’s cash and marketable debt securities amounted to $2.80 billion as of Sep 30, 2016 compared with $3.38 billion as of Dec 31, 2015.

The company generated $1.49 billion in cash from operating activities during the first nine months of 2016 compared with $1.85 billion in the prior-year period.

Guidance

PACCAR revised its estimate for 2016 industry sales in the above 16-ton truck market in Europe to 290,000–300,000 units from the prior range of 280,000–300,000 units. However, sales are expected to reduce to 260,000-290,000 units in 2017.

Further, the estimate for Class 8 industry retail sales for the U.S. and Canada in 2016 was lowered to the range of 215,000-225,000 units from the prior expectation of 220,000–240,000 vehicles. The same is expected to be 200,000-230,000 vehicles in 2017.

For 2016, the company targets capital investments of $375–$400 million, and research and development expenses of $240–$250 million for aftermarket support, enhanced manufacturing and parts distribution facilities as well as new product development. Capital investments are projected to be $375–$425 million, with research and development expenses of $270–$300 million in 2017.

Zacks Rank

PACCAR currently carries a Zacks Rank #3 (Hold).

Some better-ranked auto stocks include The Goodyear Tire & Rubber Company (NASDAQ:GT) , Tata Motors Limited (NYSE:TTM) and SORL Auto Parts, Inc. (NASDAQ:SORL) .

Goodyear posted positive earnings surprises in the last four quarters, with an average beat of 10.28%.The company sports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here

Tata Motors has a long-term expected growth rate of 3.6%. The Indian automaker also sports a Zacks Rank #1.

SORL Motor Parts, a Zacks Rank #2 (Buy) stock, has posted an average positive earnings surprise of 7.46% over the last four quarters.

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