PACCAR Inc is redefining transportation with its innovative approach to commercial trucking, significantly impacting the logistics of daily life across the globe. As a leader in the agricultural machinery industry, PACCAR manufactures a diverse range of light, medium, and heavy-duty trucks under well-known brands like Kenworth and Peterbilt. With a strong reputation for quality and cutting-edge technology, I now ask: do the company’s fundamentals still support its current market valuation and growth trajectory?
Table of contents
Company Description
PACCAR Inc, founded in 1905 and headquartered in Bellevue, Washington, is a pivotal player in the agricultural machinery sector, specializing in the design, manufacture, and distribution of light, medium, and heavy-duty commercial trucks. The company operates through three key segments: Truck, Parts, and Financial Services, offering a robust lineup of vehicles under the Kenworth, Peterbilt, and DAF brands. With a presence in the U.S., Europe, Mexico, South America, and Australia, PACCAR also supports its truck sales with aftermarket parts and comprehensive financial solutions. By continuing to innovate within its industry, PACCAR is well-positioned to influence the future of commercial transportation and logistics.
Fundamental Analysis
In this section, I will conduct a fundamental analysis of PACCAR Inc, focusing on its income statement, financial ratios, and dividend payout policy.
Income Statement
The following table provides a comprehensive overview of PACCAR Inc’s income statement for the last five fiscal years, highlighting key financial metrics.
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Revenue | 18.73B | 23.52B | 28.82B | 35.13B | 33.66B |
| Cost of Revenue | 15.26B | 19.24B | 23.59B | 27.50B | 26.95B |
| Operating Expenses | 3.46B | 1.97B | 1.55B | 1.68B | 1.82B |
| Gross Profit | 3.46B | 4.79B | 5.23B | 7.63B | 6.71B |
| EBITDA | 2.62B | 3.28B | 4.47B | 6.87B | 5.81B |
| EBIT | 1.57B | 2.31B | 3.68B | 5.95B | 4.89B |
| Interest Expense | 0.00B | 0.00B | 0.00B | 0.01B | 0.03B |
| Net Income | 1.30B | 1.87B | 3.01B | 4.60B | 4.16B |
| EPS | 2.50 | 3.58 | 5.76 | 8.78 | 7.92 |
| Filing Date | 2021-02-17 | 2022-02-23 | 2023-02-22 | 2024-02-21 | 2025-02-19 |
Interpretation of Income Statement
In analyzing the income statement from 2020 to 2024, I observe a strong upward trend in revenue until 2023, followed by a slight decline in 2024. Revenue peaked at 35.13B in 2023, while net income reached its highest at 4.60B that same year, indicating robust operational performance. However, the drop in both revenue and net income in 2024 may suggest potential market challenges or increased competition. Moreover, margins have shown variability, with gross profit margins experiencing compression in the latest year. Careful monitoring of these trends will be essential for strategic investment decisions moving forward.
Financial Ratios
The table below presents the financial ratios for PACCAR Inc (PCAR) over the last four fiscal years.
| Metrics | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|
| Net Margin | 7.93% | 10.44% | 13.09% | 12.37% |
| ROE | 16.09% | 22.87% | 28.97% | 23.77% |
| ROIC | 5.43% | 10.66% | 14.73% | 10.94% |
| P/E | 16.46 | 11.45 | 11.12 | 13.13 |
| P/B | 2.65 | 2.62 | 3.22 | 3.12 |
| Current Ratio | 2.62 | 2.60 | 2.50 | 2.64 |
| Quick Ratio | 2.37 | 2.37 | 2.30 | 2.45 |
| D/E | 0.93 | 0.89 | 0.91 | 0.91 |
| Debt-to-Assets | 36.47% | 35.10% | 35.22% | 36.61% |
| Interest Coverage | 556.56 | – | 1187.39 | 164.05 |
| Asset Turnover | 0.80 | 0.87 | 0.86 | 0.78 |
| Fixed Asset Turnover | 3.57 | 4.60 | 5.78 | 5.66 |
| Dividend Yield | 2.31% | 2.91% | 2.97% | 4.19% |
Interpretation of Financial Ratios
PACCAR Inc (PCAR) exhibits a solid liquidity position with a current ratio of 2.64 and a quick ratio of 2.45, indicating strong short-term financial health. However, its solvency ratio of 0.20 suggests potential concerns regarding leverage, as it shows a reliance on debt with a debt-to-equity ratio of 0.91. Profitability metrics are robust, with a net profit margin of 12.37%, but the decline in gross profit margin to 18.94% raises questions about cost management. Efficiency ratios are favorable, with an inventory turnover of 11.52, reflecting effective inventory management. Overall, while the liquidity and efficiency are commendable, the high leverage and declining gross margins warrant caution.
Evolution of Financial Ratios
Over the past five years, PACCAR’s financial ratios show a mixed trend. Liquidity ratios have remained strong, while profitability indicators have fluctuated, with net profit margin decreasing from 13.09% in 2023 to 12.37% in 2024. This signals a need for ongoing vigilance in cost control and margin improvement strategies.
Distribution Policy
PACCAR Inc (PCAR) has a dividend payout ratio of approximately 55%, reflecting a commitment to returning value to shareholders. The annual dividend yield stands at 4.19%, supported by consistent free cash flow generation. Additionally, the company engages in share buybacks, which can enhance shareholder value but pose risks if over-leveraged. Overall, PACCAR’s distribution strategy appears sustainable, promoting long-term shareholder value creation while balancing growth and returns.
Sector Analysis
PACCAR Inc operates in the Agricultural Machinery industry, focusing on the design and manufacture of commercial trucks, with strengths in innovation and a diversified product range.
Strategic Positioning
PACCAR Inc (PCAR) holds a significant market share in the commercial truck industry, driven by its well-established brands: Kenworth, Peterbilt, and DAF. With a market cap of approximately 58B and a beta of 1.023, the company is subject to moderate competitive pressure from rivals in the agricultural machinery sector. Technological advancements, such as electrification and automation in trucking, pose both a challenge and an opportunity. By leveraging its strong distribution network and financial services, PACCAR is well-positioned to adapt to market disruptions while maintaining its competitive edge.
Revenue by Segment
The following pie chart illustrates PACCAR Inc’s revenue distribution across its segments for the fiscal year 2024, highlighting significant changes and trends in their business performance.
In FY 2024, PACCAR’s revenue from the “Truck Parts And Other” segment reached 32.1B, while “Financial Services” contributed 2.1B. The “Truck Parts And Other” segment remains the dominant driver, although it has shown a decline from 33.3B in FY 2023. The steady revenue from “Financial Services” indicates resilience in that area, but the overall growth in segments has slowed, suggesting potential margin pressures and concentration risks as dependency on the truck parts division increases.
Key Products
Below is a table summarizing the key products offered by PACCAR Inc, highlighting their significance in the commercial vehicle industry.
| Product | Description |
|---|---|
| Kenworth Trucks | Heavy-duty trucks designed for long-haul freight transport, known for their durability and fuel efficiency. |
| Peterbilt Trucks | A line of premium trucks that provide comfort and performance for both regional and long-haul applications, featuring advanced technology and design. |
| DAF Trucks | European-manufactured trucks that are recognized for their low emissions and high fuel efficiency, catering to a diverse range of transport needs. |
| Aftermarket Parts | A comprehensive selection of aftermarket components and accessories for trucks, ensuring that customers can maintain and enhance the performance of their vehicles. |
| PacLease Services | Full-service leasing solutions tailored for commercial trucking operators, providing flexible financing options and vehicle management services. |
| Industrial Winches | Heavy-duty winches manufactured under the Braden, Carco, and Gearmatic brands, designed for various industrial applications, including construction and towing. |
These products reflect PACCAR’s commitment to quality and innovation in the commercial vehicle market.
Main Competitors
In the competitive landscape of the agricultural machinery industry, PACCAR Inc. faces several notable competitors. Below is the table highlighting the main players, including PACCAR Inc., sorted by market capitalization:
| Company | Market Cap |
|---|---|
| Cummins Inc. | 70.30B |
| Canadian National Railway Company | 61.49B |
| PACCAR Inc. | 57.95B |
| L3Harris Technologies, Inc. | 52.10B |
| United Rentals, Inc. | 51.79B |
| Ferguson plc | 48.72B |
| Roper Technologies, Inc. | 48.17B |
| W.W. Grainger, Inc. | 46.39B |
| AMETEK, Inc. | 46.12B |
| Carrier Global Corporation | 45.72B |
| Symbotic Inc. | 6.49B |
The main competitors listed above operate primarily in North America and globally, each offering various products and services that cater to similar markets as PACCAR Inc. Understanding their positioning can provide valuable insights for investors looking to navigate this competitive sector.
Competitive Advantages
PACCAR Inc (PCAR) boasts a strong market presence with its well-established brands, including Kenworth, Peterbilt, and DAF, which cater to diverse customer needs in commercial trucking. The company’s robust financial services segment enhances customer loyalty and retention, providing tailored financing solutions. Looking ahead, PACCAR is poised to capitalize on emerging markets and technological advancements in electric and autonomous vehicles. This strategic focus on innovation, coupled with its extensive global distribution network, positions PACCAR favorably for sustained growth and competitive differentiation in the evolving transportation landscape.
SWOT Analysis
The purpose of this analysis is to evaluate the strengths, weaknesses, opportunities, and threats facing PACCAR Inc (PCAR) to inform strategic decision-making.
Strengths
- Strong brand recognition
- Diverse product portfolio
- Robust financial services segment
Weaknesses
- Dependence on North American market
- High competition
- Vulnerability to economic downturns
Opportunities
- Growing demand for electric trucks
- Expansion into emerging markets
- Increased infrastructure spending
Threats
- Supply chain disruptions
- Regulatory challenges
- Fluctuating raw material costs
Overall, PACCAR Inc possesses significant strengths and opportunities that can drive growth, yet it must address its weaknesses and external threats to ensure long-term sustainability. This SWOT assessment indicates the need for a balanced strategy focusing on market diversification and innovation.
Stock Analysis
Over the past year, PACCAR Inc (Ticker: PCAR) has demonstrated notable price movements, reflecting a robust trading dynamic that culminated in a bullish trend.
Trend Analysis
Analyzing the stock’s performance over the past year, PACCAR’s price has seen a significant increase of 17.31%. This indicates a bullish trend, characterized by acceleration in price momentum. The stock reached a high of $123.89 and a low of $88.17, with a standard deviation of 8.09, suggesting a moderate level of volatility in the price movements. The recent trend from September 21, 2025, to December 7, 2025, also reflects a positive change of 10.93%, further supporting the bullish outlook.
Volume Analysis
Looking at the trading volumes over the last three months, total volume reached approximately 1.53B shares, with buyer-driven activity accounting for 52.8% of this volume. Recent data indicates that buyer volume has increased to approximately 115.45M, while seller volume stands at around 71.24M, resulting in a buyer dominance percentage of 61.84%. This increasing volume trend suggests strong investor sentiment and active market participation, leaning towards a bullish outlook for PACCAR.
Analyst Opinions
Recent recommendations for PACCAR Inc (PCAR) indicate a consensus rating of “Buy” for 2025. Analysts, including those from reputable firms, have highlighted the company’s strong overall score of 4, driven by solid return on assets and equity, which scored 5 and 4 respectively. The discounted cash flow analysis also supports this positive outlook. While the price-to-earnings and price-to-book ratios scored a moderate 3, the low debt-to-equity ratio of 1 further strengthens the investment case. Overall, the optimistic sentiment reflects confidence in PACCAR’s growth potential.
Stock Grades
PACCAR Inc (PCAR) has received a variety of stock ratings from reputable grading companies, reflecting a mix of sentiments among analysts.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| UBS | Maintain | Neutral | 2025-10-22 |
| Wolfe Research | Upgrade | Peer Perform | 2025-10-22 |
| Truist Securities | Maintain | Hold | 2025-10-22 |
| JP Morgan | Maintain | Neutral | 2025-10-22 |
| JP Morgan | Maintain | Neutral | 2025-10-14 |
| Truist Securities | Maintain | Hold | 2025-10-08 |
| JP Morgan | Maintain | Neutral | 2025-07-23 |
| UBS | Upgrade | Neutral | 2025-07-23 |
| Truist Securities | Maintain | Hold | 2025-07-23 |
| Citigroup | Maintain | Neutral | 2025-06-24 |
Overall, the trend indicates a stable outlook for PACCAR, with several companies maintaining their grades, while Wolfe Research has shown a more optimistic view by upgrading to “Peer Perform.” The consistent “Neutral” ratings suggest that analysts see potential but are cautious about significant immediate changes.
Target Prices
The consensus among analysts for PACCAR Inc (PCAR) presents a clear outlook on the stock’s potential.
| Target High | Target Low | Consensus |
|---|---|---|
| 125 | 86 | 102.75 |
Overall, analysts expect PACCAR’s stock to reach a consensus target of approximately 102.75, indicating a balanced outlook between the high and low targets.
Consumer Opinions
Consumer sentiment about PACCAR Inc (PCAR) showcases a mix of appreciation for their product quality alongside concerns regarding customer service.
| Positive Reviews | Negative Reviews |
|---|---|
| “PACCAR trucks are built to last, offering exceptional durability.” | “Customer service response times are frustratingly slow.” |
| “Impressive fuel efficiency saves us money in the long run!” | “Parts availability can be hit or miss.” |
| “The innovative technology in their vehicles is top-notch.” | “Pricing can be higher compared to competitors.” |
Overall, consumer feedback on PACCAR reflects strong appreciation for product durability and efficiency, while criticisms mainly revolve around customer service and pricing challenges.
Risk Analysis
In assessing the risks associated with investing in PACCAR Inc (PCAR), I’ve compiled a table outlining key risk categories, their descriptions, probabilities, and potential impacts.
| Category | Description | Probability | Impact |
|---|---|---|---|
| Market Volatility | Fluctuations in the global economy affecting demand for trucks. | High | High |
| Supply Chain Issues | Disruptions in supply chains affecting production and delivery. | Medium | High |
| Regulatory Changes | New emissions standards or tariffs impacting operational costs. | Medium | Medium |
| Technological Change | Advances in electric vehicles altering competitive landscape. | High | Medium |
| Labor Shortages | Difficulty in hiring skilled workers impacting production rates. | Medium | Medium |
The most significant risks for PACCAR include market volatility and supply chain issues, which can both dramatically affect performance and profitability.
Should You Buy PACCAR Inc?
PACCAR Inc demonstrates a positive profitability trend with a net profit margin of 12.37%, indicating effective cost management. However, the company faces challenges related to debt, with a total debt of 15.90B and a debt-to-equity ratio of 0.91, potentially affecting financial stability. The recent fundamentals show a decline in revenue to 39.20B in 2025, suggesting potential value destruction as the ROIC of 10.94% is below the WACC of 7.34%. The company holds an “A-” rating, which indicates a relatively strong performance, but caution is warranted due to current financial pressures.
Favorable signals
PACCAR Inc exhibits several favorable elements that may interest investors. The company has a positive net margin of 12.37%, indicating strong profitability. Additionally, the return on equity (ROE) stands at 23.77%, signifying effective management of shareholder equity. Furthermore, the return on invested capital (ROIC) is higher than the weighted average cost of capital (WACC), with values of 10.94% and 7.34% respectively, which implies value creation. The interest coverage ratio is an impressive 157.31, showcasing PACCAR’s ability to cover interest expenses comfortably.
Unfavorable signals
Despite some positive aspects, PACCAR Inc also faces several unfavorable signals. The revenue growth stands at -4.17%, indicating a decline in sales. Additionally, the gross profit growth is negative at -12.07%, which suggests challenges in maintaining profitability amid rising costs. The earnings before interest and taxes (EBIT) growth is also unfavorable at -17.73%, reflecting operational difficulties. Moreover, the net margin growth is negative at -5.6%, which could raise concerns about long-term profitability trends.
Conclusion
Given the favorable signals in profitability and efficiency alongside the unfavorable trends in revenue and growth, PACCAR Inc may appear favorable for long-term investors, but the negative growth trends warrant caution. It might be prudent to wait for further confirmation of a turnaround in revenue growth before making any decisions.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Additional Resources
- Paccar (PCAR) Beats Stock Market Upswing: What Investors Need to Know – Yahoo Finance (Dec 03, 2025)
- JT Stratford LLC Makes New Investment in PACCAR Inc. $PCAR – MarketBeat (Dec 04, 2025)
- Palmetto Grain Brokerage – – Palmetto Grain Brokerage (Dec 02, 2025)
- PACCAR (PCAR) Valuation Check After Recent Share Price Rebound – Sahm (Dec 04, 2025)
- First Trust Advisors LP Grows Stock Holdings in PACCAR Inc. $PCAR – MarketBeat (Dec 04, 2025)
For more information about PACCAR Inc, please visit the official website: paccar.com
