PACCAR Inc. (PCAR) is a global designer and manufacturer of high-quality light, medium and heavy-duty commercial trucks. In addition, the company distributes aftermarket parts for trucks and related commercial vehicles.
The company generated 78.2% of its revenue from truck sales, extended warranties and operating leases and 21.4% of its revenue from parts and revenue from dealer services during the quarter ended March 31, 2021. In terms of geographic diversification, the company generated 60.4% of its truck revenue from the U.S. and Canada, 26.6% from Europe and the remainder from Mexico, South America, Australia and other countries.
Economic Growth Spurs Earnings Beat
PACCAR reported a 13.4% increase in revenue to $5.85 billion, beating consensus estimates by $630 million, while non-GAAP earnings came in at $1.35 per share, beating consensus estimates by nine cents. With freight tonnage growing along with the U.S. economy, Class 8 truck orders in the U.S. and Canada rose nearly 300% during the first quarter.
Some analysts see these trends continuing. BMO Capital raised its price target, saying that the commercial vehicle market is set to “meaningfully rebound” and that the snapback could last through 2024. That said, the analyst notes that the company’s rapidly-growing profitability could further compress the stock’s valuation and provide a better entry point down the road.
The company raised its quarterly dividend by 6.3% to $0.34 per share, which represents a 1.45% forward yield. The dividend is payable on June 2, 2021, to shareholders on record as of May 12, 2021.
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