GICS Sector : Industrials
PACCAR Inc designs, manufactures, and distributes light, medium, and heavy-duty commercial trucks in the United States, Europe, Mexico, South America, Australia, and internationally.It operates through three segments: Truck, Parts, and Financial Services.The Truck segment designs, manufactures, and distributes trucks for the over-the-road and off-highway hauling of commercial and consumer goods.
PACCAR reported revenues of $6.7 billion and net income of $590 million in the third quarter of 2025, with earnings per share (EPS) coming in at $1.12, slightly below estimates of $1.15. The company's parts segment achieved record quarterly revenues of $1.72 billion, up 4% from the same period last year, with a pre-tax income of $410 million. Truck parts and other gross margins were 12.5% in the third quarter. The company's financial performance was impacted by tariffs, with a headwind of $75 million in Q3, peaking in October.
Publication Date: Oct -21
PACCAR Financial Services also performed well, with a pre-tax income of $126 million, an 18% increase from the previous year. The company's truck delivery numbers were 31,900 in the third quarter, with expectations to deliver around 32,000 in the fourth quarter. The parts business was impacted by tariffs, with a mix shift in proprietary versus all-makes parts and regional impact.
PACCAR estimates the US and Canadian Class 8 market to be in a range of 230,000 to 245,000 trucks this year and 230,000 to 270,000 next year. In Europe, the market is expected to be between 275,000 to 295,000 vehicles this year and 270,000 to 300,000 next year. The company expects a gradual lift in demand, accelerating as the year goes on, with a positive growth profile for 2026 driven by investments in distribution and AI.
The recent Section 232 implementation is expected to bring benefits to PACCAR's customers and the company, with a potential cost advantage as a US manufacturer. The company has a 3.75% value on trucks to offset tariffs through 2030, giving it time to plan ahead. PACCAR's pricing in the truck business was down 1.3% in Q3, with costs up 4.6%, but expects favorability to start being achieved as it moves forward.
With a P/E Ratio of 19.51 and an EV/EBITDA of 16.11, the market seems to have priced in a reasonable growth expectation. Analysts estimate next year's revenue growth at 4.6%. The company's Dividend Yield is 4.0%, indicating a relatively attractive return for investors. The ROIC of 28.84% and ROE of 19.76% demonstrate PACCAR's ability to generate strong returns on capital and equity.
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PACCAR's truck segment growth of 4.0 is driven by increasing demand for freight transportation, expansion of e-commerce, and replacement of aging fleets. The company's innovative products, such as the Kenworth and Peterbilt brands, and its strong financial position, enable it to capitalize on these trends and invest in new technologies, like electric and autonomous vehicles.
PACCAR Inc's parts segment growth of 3.5% is driven by increased demand for aftermarket parts, expanding global truck population, and growing sales of high-quality, profitable parts. Additionally, the company's strong relationships with OEMs and its extensive distribution network contribute to its growth.
PACCAR's Financial Services segment growth of 5.0% is driven by increased demand for financing of high-quality trucks and trailers, expanded insurance offerings, and strong portfolio performance. Additionally, the segment benefits from diversified revenue streams, including fees from parts and service operations, contributing to steady growth.
PACCAR Inc's growth is driven by strong demand for trucks, increased market share, and favorable pricing. The company's innovative products, expanded dealership network, and efficient manufacturing processes contribute to its 2.0% growth rate. Additionally, a recovering global economy and infrastructure investments support the company's positive outlook.
Intersegment growth of 0.0 for PACCAR Inc suggests stable segment performance. Fundamental drivers include consistent demand for trucks and parts, efficient supply chain management, and potentially, a focus on maintaining market share rather than aggressive expansion. This stability may reflect a mature market with limited growth opportunities.
Heavy-duty trucks designed for on-highway and vocational applications, offering a range of models with advanced technology and fuel efficiency features.
Medium and heavy-duty trucks designed for on-highway and vocational applications, offering a range of models with advanced technology and fuel efficiency features.
Medium and heavy-duty trucks designed for on-highway and vocational applications, offering a range of models with advanced technology and fuel efficiency features.
A comprehensive range of parts and components for PACCAR's trucks, including engines, transmissions, and axles.
Financial products and services, including financing, leasing, and insurance, designed to support customers in purchasing and operating PACCAR's trucks.
Advanced technologies, including autonomous driving, connected vehicle systems, and alternative fuel solutions, aimed at improving efficiency, safety, and sustainability.
PACCAR Inc's products are highly specialized and have a strong brand reputation, making it difficult for customers to switch to substitutes. Additionally, the company's products are often customized to meet specific customer needs, which further reduces the threat of substitutes.
PACCAR Inc's customers are primarily large transportation companies and governments, which can exert some bargaining power. However, the company's strong brand reputation and high-quality products limit the customers' ability to negotiate prices and terms.
PACCAR Inc has a large and diverse supplier base, which reduces the bargaining power of individual suppliers. Additionally, the company has a strong purchasing function and is able to negotiate favorable prices and terms with its suppliers.
The truck manufacturing industry has high barriers to entry, including high capital requirements, complex manufacturing processes, and stringent regulatory requirements. These barriers make it difficult for new entrants to compete with established companies like PACCAR Inc.
The truck manufacturing industry is highly competitive, with several established players competing for market share. PACCAR Inc competes with companies like Daimler AG, Volvo Group, and Navistar International Corporation, which are all well-established and have strong brand reputations.
| Value | |
|---|---|
| Debt Weight | 47.59% |
| Debt Cost | 4.30% |
| Equity Weight | 52.41% |
| Equity Cost | 9.05% |
| WACC | 6.79% |
| Leverage | 90.79% |
Value: 3.0
Growth: 7.9
Quality: 6.7
Yield: 9.0
Momentum: 4.0
Volatility: 8.0
1-Year Total Return ->
Value: 3.7
Growth: 6.7
Quality: 6.1
Yield: 8.0
Momentum: 3.0
Volatility: 8.3
1-Year Total Return ->
Value: 1.8
Growth: 5.8
Quality: 9.0
Yield: 6.0
Momentum: 3.0
Volatility: 9.3
1-Year Total Return ->
Value: 4.1
Growth: 6.2
Quality: 6.3
Yield: 4.0
Momentum: 10.0
Volatility: 4.0
1-Year Total Return ->
Value: 2.0
Growth: 7.0
Quality: 7.0
Yield: 3.0
Momentum: 7.5
Volatility: 7.3
1-Year Total Return ->
Value: 2.8
Growth: 6.9
Quality: 4.8
Yield: 2.0
Momentum: 6.5
Volatility: 8.7
1-Year Total Return ->