PACCAR (PCAR) Q1 Earnings On Par, Sales Beat Estimates

PACCAR Inc.’s (NASDAQ:PCAR) first-quarter 2017 earnings declined 48% to 88 cents per share from $1.69 recorded in the year-ago quarter. Earnings were on par with the Zacks Consensus Estimate of 88 cents. Results benefitted from rising truck production in North America and Europe, as well as record quarterly pre-tax profits in the PACCAR Parts segment.

Net sales and financial services revenues declined to $4.24 million from $4.3 million recorded in first-quarter 2016. Revenues in the reported quarter topped the Zacks Consensus Estimate of $3.93 billion.

PACCAR Inc. Price, Consensus and EPS Surprise

Segment Results

Revenues from the Truck, Parts and Other segment decreased to $3.94 billion in first-quarter 2017 from $4.01 billion in the year-ago quarter. The segment reported pre-tax income of $382.8 million compared with a loss of $515.6 million a year ago.

Revenues in the Financial Services segment (comprising a portfolio of 178,000 trucks and trailers, with total assets of $12.27 billion) went up 4.4% to $302.2 million. Pre-tax income in the segment declined to $57.3 million from $80.3 million in the year-ago quarter.

Financial Position

PACCAR’s cash and marketable debt securities amounted to $2.89 billion as of Mar 31, 2017 compared with 3.23 billion as of Mar 31, 2016. Long-term debt was absent in both the periods.

Capital Deployment

In first quarter 2017, PACCAR announced total cash dividend of 24 cents per share.

Guidance

PACCAR increased sales expectations in the above 16-ton truck market in Europe to around 270,000−300,000 units, from the previous guidance of 260,000–290,000 units, in 2017.

Further, the company reiterated the Class 8 industry retail sales in the U.S. and Canada estimation of 190,000-220,000 vehicles.

Price Performance

PACCAR outperformed the Zacks categorized Auto Manufacturers-Domestic industry in the last six months. The company’s shares rallied 22.6% in the last six months, compared with a 16.5% gain recorded by the industry.

Zacks Rank & Key Picks

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

Some better-ranked companies in the auto space include Tata Motors Ltd (NYSE:TTM) , CNH Industrial N.V. (NYSE:CNHI) and Volkswagen (DE:VOWG_p) AG (OTC:VLKAY) . All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Tata Motors has an expected long-term growth of 27.91%.

CNH Industrial has an expected long-term growth of 20%.

Volkswagen has an expected long-term growth of 16.8%.

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