International Growth for Paccar

Tags: pcar
17 Jan 11:10pm
Posted by ZacksResearch
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A Hold recommendation has recently been issued to truck manufacturer Paccar, Inc. (PCAR) by Zacks senior automobile industry analyst Paul Raman, CFA. Here's what his update had to say:

'Paccar is benefiting from rising prices and increasing market share, along with strong growth in Mexico and Australia. On October 24, 2007, Paccar reported third quarter earnings. Earnings per share were $0.81, compared to $1.07 last year. Sales were $3.45 billion, down from $3.95 billion in last year's quarter.

'The company is in the midst of a 50% decline in Class 8 builds due to new emission regulations. This is negatively impacting earnings in the U.S. and Europe. Additionally, Paccar is leaving a layer of margin on the table by sourcing engines externally, and is currently not capturing as much of the downstream parts business as it could.

'Currently, the stock is valued at 12.5x 2008 earnings of $3.90. The company achieved a compounded annual growth rate (CAGR) in earnings per share of 22.8% for the last ten years compared to the Standard & Poor (S&P) 500's growth rate of 7.7%.

'The stock also outperformed the S&P 500 Index for the previous one-year, three-year, five-year, and ten-year time periods. However, the strong Class 8 downturn in the U.S. leads us to rate the stock a Hold, with a six-month target price of $51. This is 13.1x our 2008 earnings estimate.'

Read the full analyst report on PCAR.




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