PACCAR
PCAR
$110.82
+0.01%
Paccar Inc is a leading manufacturer of medium- and heavy-duty commercial trucks sold under the premium Kenworth and Peterbilt nameplates in the Americas and Australia and the DAF brand in Europe and South America, supported by a captive financial services arm and a growing aftermarket parts business. The company is a premium-tier incumbent rather than a disruptor, commanding roughly 30% of the North American Class 8 market and about 15% of the European heavy-duty market, and it differentiates itself through brand strength, a 2,200-dealer network, vertical integration into engines and axles, and a long record of profitability through cycles. The current investor debate centers on whether Paccar is entering a cyclical downturn in truck demand or merely a pause: revenue growth has decelerated to roughly flat year over year, gross margins have compressed from about 19% in late 2024 to roughly 16% in the latest quarter, and the stock has fallen about 12% over three months even as the broader market rose. Offsetting this, the company retains a fortress balance sheet, a rising dividend, and exposure to AI-driven data-center construction and infrastructure spending that has lifted sentiment across heavy equipment names, leaving investors to weigh trough-cycle earnings risk against long-term franchise quality.…
PCAR
PACCAR
$110.82
PCAR 12-Month Price Forecast
Wall Street consensus
Most Wall Street analysts maintain a constructive view on PACCAR's 12-month outlook, with a consensus price target around $133.38 and implied upside of +20.4% versus the current price.
Average Target
$133.38
0 analysts
Implied Upside
+20.4%
vs. current price
Analyst Count
—
covering this stock
Price Range
$107 - $162
Analyst target range
Bulls vs Bears: PCAR Investment Factors
The bear case currently carries stronger near-term evidence: gross margin has compressed roughly 310 basis points from Q3 2024 to Q2 2026, EPS has declined for several consecutive quarters, revenue growth is essentially flat at 0.48%, and the stock has underperformed the S&P 500 by nearly 20 percentage points over six months. The bull case rests on franchise quality, a fortress balance sheet (current ratio 3.08), a 3.94% dividend yield, and a Street consensus that still sees about 20% upside to a $133.38 average target. The single most important tension is whether the margin decline is a cyclical trough that normalizes as truck demand and pricing recover, or a structural reset driven by weaker pricing power and mix. If gross margin stabilizes above 16% and order trends improve, the stock looks like a value opportunity; if margins break below the 13% Q1 2026 level, the 24x trailing PE becomes difficult to defend.
Bullish
- Analyst consensus still constructive: All 16 covering analysts carry a 'buy' recommendation (mean 2.21) with an average target of $133.38, implying roughly 20% upside from the $110.82 close. Even the low target of $107 is only about 3% below the current price, suggesting the Street sees limited further downside.
- Fortress balance sheet and liquidity: The current ratio stands at 3.08 and debt-to-equity at just 0.81, with Q2 2026 interest expense at zero and $86M of interest income. This liquidity cushion lets Paccar fund the cycle, buy back stock, and raise the dividend without balance-sheet stress.
- Strong free cash flow generation: TTM free cash flow is $3.13B against a $57.6B market cap, a roughly 5.4% FCF yield. Q2 2026 net income of $752M on $7.55B revenue (9.96% net margin) confirms the business still converts earnings into cash even at a softer point in the cycle.
- Premium dividend with room to grow: The 3.94% dividend yield is well above the market average and reflects a long record of uninterrupted payouts. The 95% payout ratio looks stretched on trailing EPS, but against the $9.29 consensus forward EPS it normalizes to roughly 42%, leaving room for continued increases.
Bearish
- Gross margin compression is severe: Gross margin fell from 19.17% in Q3 2024 to 16.07% in Q2 2026, and operating margin slid from 13.63% to 11.65% over the same span. Q1 2026 gross margin of just 13.12% shows how quickly pricing and mix can erode profitability in a downturn.
- Earnings are clearly rolling over: Diluted EPS fell from $1.85 in Q3 2024 to $1.43 in Q2 2026, and quarterly net income dropped from $972M to $752M. Revenue growth has stalled at 0.48% year over year, confirming the truck cycle has turned rather than merely paused.
- Valuation is not cheap on trailing numbers: The trailing PE of 24.2x and EV/EBITDA of 15.9x are rich for a cyclical machinery maker at a cyclical peak-to-trough transition. The 2.03x price-to-sales and 2.99x price-to-book offer no obvious margin of safety if earnings keep falling.
- Persistent underperformance versus the market: PCAR is down 12.19% over three months and 12.22% over six months while the S&P 500 rose 2.69% and 7.48%, producing relative strength of -14.88% and -19.70%. The stock is down 6.26% in the past month alone, and momentum remains negative.
PCAR Technical Analysis
Beta
0.99
0.99x market volatility
Max Drawdown
-22.7%
Largest decline past year
52-Week Range
$94-$139
Price range past year
Annual Return
+16.5%
Cumulative gain past year
| Period | PCAR Return | S&P 500 |
|---|---|---|
| 1m | -6.3% | +0.2% |
| 3m | -12.2% | +2.9% |
| 6m | -12.2% | +8.4% |
| 1y | +16.5% | +14.9% |
| ytd | -0.7% | +11.9% |
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PCAR Fundamental Analysis
Quarterly Revenue
$7.5B
2026-06
Revenue YoY Growth
+0.5%
YoY Comparison
Gross Margin
16.1%
Latest Quarter
Free Cash Flow
$3.1B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is PCAR Overvalued?
PE
24.2x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 9x~26x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
15.9x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks center on margin compression and earnings deterioration. Gross margin has fallen from 19.17% in Q3 2024 to 16.07% in Q2 2026, with Q1 2026 dipping to 13.12%, while operating margin fell from 13.63% to 11.65% over the same period. Diluted EPS declined from $1.85 to $1.43, and revenue growth has stalled at 0.48% year over year. The 95.4% payout ratio leaves little cushion if earnings fall toward the $8.57 low-end consensus, and the truck segment's 74% revenue concentration means a North American Class 8 downturn would hit results directly. Debt-to-equity of 0.81 and a current ratio of 3.08 mitigate balance-sheet risk, but they do not offset cyclical earnings volatility.
Market and competitive risks include valuation compression and relative underperformance. At 24.2x trailing earnings and 15.9x EV/EBITDA, PCAR trades at a premium that assumes a margin recovery; if the cycle worsens, multiple compression could compound the earnings decline. The stock has fallen 12.19% over three months and 12.22% over six months versus gains of 2.69% and 7.48% for the S&P 500, with relative strength of -14.88% and -19.70%. Beta of 0.988 means PCAR broadly tracks the market, so a macro slowdown that hits freight volumes and capital spending would transmit directly to truck orders. Competitive pressure from lower-cost truck makers and the risk that AI-infrastructure enthusiasm rotates away from heavy equipment names add further headwinds.
The worst-case scenario is a full freight recession: carriers defer Class 8 orders, Paccar cuts production and loses operating leverage, gross margin falls toward the 13% Q1 2026 level, and forward EPS drifts toward the $8.57 low-end estimate. At a compressed 12x multiple, that implies a price near $103, close to the $107 analyst low target. A deeper derating toward the 52-week low of $93.19 would represent roughly a 16% loss from the current $110.82, and the historical max drawdown of -22.68% shows how far the stock can fall in a prolonged downturn. In that scenario, the dividend's 95% payout ratio would also come under scrutiny, adding a sentiment overhang.