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Longbow Research Downgrades PACCAR to ‘Underperform’

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Price movement 

PACCAR (PCAR) has a market cap of $18.9 billion. It fell by 1.6% to close at $53.65 per share on July 19, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -0.91%, -1.3%, and 14.2%, respectively, on the same day.

PCAR is trading 1.9% above its 20-day moving average, 1.1% below its 50-day moving average, and 4.1% above its 200-day moving average.

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Related ETF and peers

The First Trust NASDAQ-100 Ex-Technology Sector Index ETF (QQXT) invests 1.7% of its holdings in PACCAR. The ETF tracks an equal-weighted index of NASDAQ-100 stocks that excludes technology companies. The YTD price movement of QQXT was -2.4% on July 19.

The market caps of PACCAR’s competitors are as follows:

  • Cummins (CMI) — $19.9 billion
  • CNH Industrial (CNHI) — $9.1 billion
  • Penske Automotive Group (PAG) — $3.0 billion

PACCAR’s rating

Longbow Research has downgraded PACCAR rating to “underperform” from “neutral” and also set the price target at $44.00 per share.

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Latest news on PACCAR

A July 19, 2016, Reuters report stated, “The European Union antitrust regulators handed down a record 2.93 billion euro ($3.24 billion) fine on German carmaker Daimler, PACCAR, Volvo/Renault, and Iveco on Tuesday for taking part in a cartel-related to emissions-reducing technology.”

It added, “DAF Trucks, owned by PACCAR, had a 752.7 million euro fine.”

PACCAR’s performance in fiscal 1Q16

In its Truck, Parts and Other segment, PACCAR reported fiscal 1Q16 net sales and revenues of $4.0 billion, a fall of 11.1% from the $4.5 billion seen in fiscal 1Q15. It reported European commission charges of $942.6 million in fiscal 1Q16.

Revenue from Financial Services rose by 1.7% to $289.4 million between fiscal 1Q15 and fiscal 1Q16. In fiscal 1Q16, its net income and EPS fell to -$594.6 million and -$1.69, respectively, compared with $378.4 million and $1.06 in fiscal 1Q15.

PACCAR’s cash and marketable debt securities fell by 4.3% and its inventories rose by 4.1% between fiscal 4Q15 and fiscal 1Q16. Its debt-to-equity ratio rose to 2.4x in fiscal 1Q16, compared with 2.0x in fiscal 4Q15.

Quarterly dividend

PACCAR has declared a quarterly cash dividend of $0.24 per share on its common stock. The dividend will be paid on September 2, 2016, to shareholders of record at the close of business on August 12, 2016.

In the next part of this series, we’ll take a look at Hasbro.

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