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Paccar (PCAR)
NASDAQ:PCAR
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Paccar
(NASDAQ:PCAR)
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Rating:72Outperform
Price Target:
$134.00
â–²(6.27% Upside)
Action:DowngradedDate:01/28/26
PCAR scores 72 driven primarily by strong multi-year financial quality and durable cash generation, supported by a technically bullish trend. The score is tempered by the 2025 cyclical slowdown and a relatively high P/E, while earnings-call guidance for improving margins and 2026 growth provides a meaningful positive offset.
Positive Factors
Free cash flow generation
PACCAR's multi-year, multi-billion free cash flow generation underpins durable financial flexibility. Strong operating and free cash flow support sustained capex, R&D, dividends and potential buybacks without reliance on external financing, helping the company weather industry cycles and fund strategic initiatives.
Aftermarket parts and finance diversification
Record Parts and Financial Services create diversified, higher-margin revenue streams that reduce reliance on new-truck cyclical sales. Parts' scale and Financial Services' 27% market share generate recurring revenue and aftermarket profits, improving margin stability and long-term cash conversion across cycles.
Sustained R&D and product leadership
Material, ongoing capex and R&D investment plus award-winning electric truck rollouts demonstrate commitment to cleaner powertrains and connected/autonomous tech. This strengthens competitive positioning as industry shifts to electrification and ADAS, supporting durable product differentiation and future revenue streams.
Negative Factors
2025 cyclical revenue and margin weakness
An ~11% revenue decline and material margin compression in 2025 highlight sensitivity to freight cycles and pricing. Such cyclical exposure can pressure earnings and free cash flow durability during downturns, limiting reinvestment capacity and increasing reliance on parts/finance to offset truck sales volatility.
Regulatory cost uncertainty (EPA '27)
Uncertainty around EPA ’27 compliance costs (~±$10k/truck) poses a structural margin and pricing challenge. Potential higher per-truck costs could shrink OEM margins or force higher prices that dampen demand, while warranty/useful-life rules could raise product support costs over multi-year horizons.
Competitive pricing and tariff timing pressure
Competitors' reluctance to pass cost increases and late tariff timing create sustained pricing pressure that can compress industry margins. This dynamic can force prolonged promotional activity, limit recovery of higher regulatory or input costs, and delay margin normalization even as volumes recover.
Paccar (PCAR) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$66.31B
Dividend Yield3.83%
Average Volume (3M)3.31M
Price to Earnings (P/E)28.0
Beta (1Y)0.85
Revenue Growth-15.29%
EPS Growth-42.93%
CountryUS
Employees30,100
SectorIndustrials
Sector Strength72
IndustryAgricultural - Machinery
Share Statistics
EPS (TTM)1.06
Shares Outstanding525,894,500
10 Day Avg. Volume3,215,173
30 Day Avg. Volume3,306,490
Financial Highlights & Ratios
PEG Ratio-0.56
Price to Book (P/B)2.99
Price to Sales (P/S)2.03
P/FCF Ratio19.02
Enterprise Value/Market Cap0.85
Enterprise Value/Revenue1.98
Enterprise Value/Gross Profit12.17
Enterprise Value/Ebitda14.38
Forecast
1Y Price Target
$130.06Price Target Upside3.15% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering9
EPS Forecast (FY)5.67
Revenue Forecast (FY)$28.17B
Paccar Business Overview & Revenue Model
Company DescriptionPACCAR 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. It sells its trucks through a network of independent dealers under the Kenworth, Peterbilt, and DAF nameplates. The Parts segment distributes aftermarket parts for trucks and related commercial vehicles. The Financial Services segment conducts full-service leasing operations under the PacLease trade name, as well as provides finance and leasing products and services to customers and dealers. This segment also offers equipment financing and administrative support services for its franchisees; retail loan and leasing services for small, medium, and large commercial trucking companies, as well as independent owners/operators and other businesses; and truck inventory financing services to independent dealers. In addition, this segment offers loans and leases directly to customers for the acquisition of trucks and related equipment. The company also manufactures and markets industrial winches under the Braden, Carco, and Gearmatic nameplates. PACCAR Inc was founded in 1905 and is headquartered in Bellevue, Washington.
How the Company Makes MoneyPaccar generates revenue primarily through the sale of trucks and related parts. The company's key revenue streams include the sale of new trucks, which accounts for a significant portion of its income, as well as aftermarket parts and services that provide ongoing revenue from existing customers. Additionally, Paccar's financial services division supports truck sales through financing solutions, further contributing to its earnings. Strategic partnerships with suppliers and ongoing investments in technological advancements, such as electric and autonomous vehicles, also enhance Paccar's profitability by ensuring competitive product offerings in the evolving automotive market.
Paccar Key Performance Indicators (KPIs)
Any
Revenue by Segment
Highlights revenue contributions from different business segments, providing insight into which areas drive growth and profitability, and where strategic focus may be needed.
Highlights revenue contributions from different business segments, providing insight into which areas drive growth and profitability, and where strategic focus may be needed.
Data provided by:
The Fly
The FlyPaccar Earnings Call Summary
Earnings Call Date:Jan 27, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 28, 2026
Earnings Call Sentiment Positive
The call conveyed a predominantly positive outlook supported by record results in Parts and Financial Services, strong annual profitability, improving margins and constructive market forecasts for 2026. Notable operational achievements, product awards and continued investments in R&D and manufacturing strengthen the long-term position. Lowlights were largely transitional or timing-related (Q4 manufacturing conversion inefficiencies, tariff timing, regulatory cost uncertainty, and near-term pricing competition). Management provided guidance and explanations that these issues are manageable and non-recurring, and expects sequential improvement across 2026.Q4-2025 Updates
Positive Updates
Strong Quarterly and Annual Financial Results
Q4 2025 revenues of $6.8 billion and net income of $557 million; full-year 2025 revenues of $28.4 billion and adjusted net income of $2.64 billion (fourth highest profit year and 87th consecutive year of profits). Adjusted after-tax return on revenue was 9.3%.
Record Performance at PACCAR Parts
PACCAR Parts achieved record annual revenues of $6.9 billion (up 3% year-over-year) and pretax profits of $1.67 billion. Q4 Parts revenue was a record $1.7 billion (up 4% YoY) with Q4 pretax profit of $415 million. Q4 parts gross margin was 29.5%.
PACCAR Financial Services Growth and Market Share Gain
PACCAR Financial Services reported record 2025 revenues of $2.2 billion and annual pretax income of $485 million (pretax income up 11% YoY). Q4 revenues were a record $569 million and Q4 pretax income rose 10% to $115 million. Market share increased to 27%, a 2 percentage-point gain versus 2024.
Solid Operational Deliveries and Inventory Position
PACCAR delivered 32,900 trucks in Q4 and expects comparable delivery levels in 2026. Company inventory position for Class 8 is 2.2 months versus an industry average of 3.2 months, indicating relatively lean dealer/on-hand inventory.
Positive Outlook and Market Forecasts
North America Class 8 market forecast for 2026 of 230,000–270,000 units; Europe above 16-ton forecast of 280,000–320,000 registrations; South America above 16-ton forecast of 100,000–110,000 trucks. Management expects accelerating demand through 2026.
Strategic Investments and R&D Commitments
2025 capital investments were $728 million and R&D $446 million. Guidance for 2026 capex is $725–$775 million and R&D $450–$500 million to support next-generation clean diesel, hybrid and alternative powertrains, battery cells, connected vehicle services, autonomous platform, and ADAS.
Recognition, New Facilities, and Product Advances
DAF XF and XD electric trucks won International Truck of the Year; DAF named Fleet Truck of the Year in the UK. PACCAR earned an 'A' rating from the Climate Disclosure Project. New engine remanufacturing facility in Mississippi and Kenworth chassis paint facility in Ohio completed; next-gen battery electric trucks introduced by DAF, Kenworth, and Peterbilt.
Parts Growth Guidance and Q1 Momentum
Management forecasts PACCAR Parts sales growth of 4%–8% for 2026 with Q1 expected at +3% YoY. Q1 company gross margin guidance is 12.5%–13%, up from Q4's 12% (expected sequential margin improvement).
Negative Updates
Soft Freight Market and 2025 Headwinds
2025 experienced soft freight markets, tariff uncertainty, and emissions policy uncertainty that pressured industry demand and contributed to operating complexity throughout the year.
Section 232 Tariff Impact and Timing Effects
The Section 232 truck tariff became effective Nov 1 and while it ultimately provides a competitive advantage to PACCAR's North American manufacturing footprint, the timing caused higher tariffs late in Q4 and contributed to margin pressure in that quarter.
Manufacturing Conversion Inefficiencies in Q4
Local-for-local manufacturing conversions (shifting production to Chillicothe, Denton, and Canada) created schedule adjustments, inefficiencies and higher overtime in Q4 that negatively impacted margins. Management did not quantify the exact impact but said it was significant and non-recurring.
Regulatory Uncertainty Around EPA 2027 Costs
EPA '27 NOx clarity arrived (35 mg), but uncertainty remains around useful life and warranty impacts on costs. Management referenced a planning range of approximately +/- $10,000 per truck for technology/cost changes, creating potential for price sensitivity and pre-buy timing effects.
Competitive Pricing Dynamics and Near-Term Pricing Uncertainty
Competitors have not fully passed their tariff and cost adjustments to market, maintaining competitive pricing and discount chatter. This keeps near-term truck pricing environment uncertain and could limit unit profitability until pricing clarity arrives.
Used Truck Market and Buyer Base Effects
Temporary weakness in used truck demand noted due to enforcement affecting certain buyer segments (e.g., non-compliant drivers). Although used truck values were up ~4% YoY, there is short-term pressure on used truck volumes and buyer confidence, with recovery tied to improving fleet profitability.
Supply Chain and Supplier Ramp Risk
Management acknowledged the potential for supplier capacity constraints if build ramps strongly in H2 2026. While suppliers have been given forecasts, a significant acceleration later in the year could stress supply chains and constrain production.
Company Guidance
PACCAR guided to sequential margin and revenue improvement in 1Q and for 2026: consolidated gross margins are expected to rise to 12.5%–13% in Q1 (vs. Q4 truck/other gross margin of 12%), PACCAR Parts is forecast +~3% in Q1 and +4%–8% for the year (Parts 2025: $6.9B revenue, $1.67B pretax; Q4 parts rev $1.7B, Q4 pretax $415M; Q4 parts gross margin 29.5%), and PACCAR Financial Services follows a record 2025 (FY rev $2.2B; pretax $485M; Q4 rev $569M; Q4 pretax $115M) with market share at 27%. Truck deliveries were 32,900 in Q4 and are expected to be at a comparable level in 2026; industry unit forecasts are 230k–270k Class 8 units for US/Canada in 2026 (2025 NA retail 233k; PACCAR share 30%), Europe 280k–320k above‑16t (2025: 298k; PACCAR heavy‑duty share 13.5%), and South America 100k–110k (2025: 115k). Planned 2026 investments include $725–775M capex and $450–500M R&D; other metrics highlighted: FY 2025 revenue $28.4B, adjusted net income $2.64B (after‑tax return on revenue 9.3%), dividends $2.72/share (yield ~3%), industry inventory 3.2 months vs. PACCAR 2.2 months, removal of tariff surcharges for 2026 due to Section 232, EPA ’27 NOx set at 35 mg (potential new‑truck cost impact ~±$10,000), and management expects 2026 to be a year of accelerated growth.Paccar Financial Statement Overview
Summary
Multi-year profitability and cash generation are strong, with consistently positive operating cash flow/free cash flow and a solid 2022–2024 earnings run. The main offset is a clear 2025 cyclical downturn (revenue down ~11% and margin compression), plus inconsistencies in the latest balance sheet fields that reduce confidence in current-year leverage/return metrics.Income Statement
Profitability is solid through 2021–2024, with net profit margins consistently healthy (roughly high-single-digits to low-teens) and strong 2023–2024 earnings. However, 2025 shows a clear downturn: revenue fell ~11% year over year and margins compressed materially versus 2024 (gross margin down and net margin down), indicating weaker pricing and/or volumes. Overall, the income statement reflects a strong multi-year run with a notable recent cyclical pullback.73
Positive
Balance Sheet
The balance sheet looks generally strong on equity size and asset base, and leverage trended better from 2022 to 2024 (debt-to-equity moved from elevated levels toward ~0.9). Return on equity was strong in 2022–2024. That said, the 2025 balance sheet data shows total debt reported as zero and return on equity as zero, which is inconsistent with prior years and likely a data quality issue; this reduces confidence in the latest-year view. Using the longer history, leverage is reasonable but not conservative.67
Positive
Cash Flow
Cash generation is a strength: operating cash flow and free cash flow are consistently positive across the period, with very strong free cash flow levels in 2022–2025 (multi-billion). Free cash flow covered a meaningful portion of net income in 2021–2024, supporting earnings quality. The main weakness is growth momentum—free cash flow growth cooled and turned slightly negative in 2024 and 2025, aligning with the 2025 revenue/margin slowdown (and some 2025 cash flow ratios are shown as zero, limiting comparability).76
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 28.44B | 33.66B | 35.13B | 28.82B | 23.52B |
| Gross Profit | 4.62B | 6.71B | 7.63B | 5.23B | 4.28B |
| EBITDA | 4.20B | 5.81B | 6.87B | 4.47B | 3.28B |
| Net Income | 2.38B | 4.16B | 4.60B | 3.01B | 1.87B |
Balance Sheet | |||||
| Total Assets | 44.34B | 43.42B | 40.82B | 33.28B | 29.51B |
| Cash, Cash Equivalents and Short-Term Investments | 9.25B | 9.84B | 9.00B | 6.31B | 4.99B |
| Total Debt | 0.00 | 15.89B | 14.38B | 11.68B | 10.76B |
| Total Liabilities | 25.07B | 25.91B | 24.94B | 20.11B | 17.92B |
| Stockholders Equity | 19.26B | 17.51B | 15.88B | 13.17B | 11.59B |
Cash Flow | |||||
| Free Cash Flow | 3.03B | 2.90B | 2.93B | 1.64B | 553.90M |
| Operating Cash Flow | 4.42B | 4.64B | 4.19B | 3.03B | 2.19B |
| Investing Cash Flow | -2.27B | -4.49B | -2.87B | -2.03B | -1.36B |
| Financing Cash Flow | -3.08B | -123.10M | 1.10B | 304.90M | -882.90M |
Paccar Technical Analysis
Positive
126.09
Price Trends
120.18
Positive
109.61
Positive
102.34
Positive
Market Momentum
1.45
Positive
55.24
Neutral
21.57
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PCAR, the sentiment is Positive. The current price of 126.09 is below the 20-day moving average (MA) of 126.21, above the 50-day MA of 120.18, and above the 200-day MA of 102.34, indicating a neutral trend. The MACD of 1.45 indicates Positive momentum. The RSI at 55.24 is Neutral, neither overbought nor oversold. The STOCH value of 21.57 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PCAR.
Paccar Risk Analysis
Paccar disclosed 17 risk factors in its most recent earnings report. Paccar reported the most risks in the "Macro & Political" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Paccar Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $345.63B | 39.49 | 43.54% | 0.98% | -1.51% | -9.69% | |
73 Outperform | $170.09B | 35.50 | 19.74% | 1.34% | -11.66% | -27.80% | |
73 Outperform | $10.63B | 16.96 | 14.90% | 1.56% | -2.28% | -0.53% | |
72 Outperform | $66.31B | 27.96 | 12.92% | 3.83% | -15.29% | -42.93% | |
64 Neutral | $9.88B | 13.98 | 18.13% | 1.10% | -20.09% | 121.28% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
59 Neutral | $15.26B | 30.17 | 6.63% | 2.67% | -18.10% | -65.24% |
* Industrials Sector Average
PCAR
Paccar
126.09
23.70
23.14%
AGCO
Agco
136.50
46.63
51.89%
CAT
Caterpillar
742.83
415.30
126.80%
CNH
CNH Industrial
12.30
0.37
3.10%
DE
Deere
629.71
168.58
36.56%
OSK
Oshkosh
170.02
74.11
77.26%
Paccar Corporate Events
Business Operations and StrategyExecutive/Board Changes
PACCAR announces executive retirement and leadership transition
Neutral
Jan 16, 2026
On January 14, 2026, PACCAR announced that Executive Vice President C. Michael Dozier will retire on April 1, 2026, after 37 years with the company, marking the departure of a long-serving senior leader. As part of the planned leadership transition effective April 1, 2026, Assistant Vice President W. Lance Walters will be promoted to Vice President to oversee operations in Australia, Mexico and South America, while Vice President Raja Shembekar will take on responsibility for international business development, signaling a reallocation of executive roles to support PACCAR’s global operations.
The most recent analyst rating on (PCAR) stock is a Hold with a $131.00 price target. To see the full list of analyst forecasts on Paccar stock, see the PCAR Stock Forecast page.
Executive/Board Changes
Paccar Announces Key Executive Promotions
Neutral
Dec 12, 2025
Paccar announced key executive promotions effective January 1, 2026, with Kevin D. Baney being promoted to President after serving as Executive Vice President since January 2025. Baney, with 31 years at the company, will oversee DAF Trucks, PACCAR Financial Services, Investor Relations, and PACCAR Parts. John N. Rich will be promoted to Executive Vice President and Chief Technology Officer, having been with the company since 2021, and will lead global technology initiatives and Peterbilt Motors Company. Laura J. Bloch will continue her role as Senior Vice President with additional responsibilities over Dynacraft.
The most recent analyst rating on (PCAR) stock is a Hold with a $115.00 price target. To see the full list of analyst forecasts on Paccar stock, see the PCAR Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.