PACCAR
PCAR
$132.06
-0.96%
Paccar Inc is a leading global manufacturer of medium- and heavy-duty trucks under the premium Kenworth, Peterbilt, and DAF nameplates, operating primarily in North America, Europe, and Australia. The company also provides financial services through its captive finance subsidiary and has been aggressively expanding its parts business, which now accounts for 20% of sales. Paccar commands a 30% share of the North American Class 8 market and 15% of the European heavy-duty market, positioning it as a dominant player in the commercial vehicle industry. The current investor narrative centers on the cyclical downturn in truck demand, as evidenced by recent revenue declines, while the company's parts and financial services segments provide some stability. Additionally, the stock has shown strong momentum recently, outperforming the broader market, likely driven by investor optimism about infrastructure spending and potential AI-related logistics demand.…
PCAR
PACCAR
$132.06
Investment Opinion: Should I buy PCAR Today?
Based on the analysis, I rate Paccar as a Hold. The company has a strong market position, solid cash flow, and a conservative balance sheet, but the cyclical downturn and premium valuation limit upside potential. The consensus analyst rating is 'Buy' with an average target price of $139.28, implying a modest 5% upside from the current price of $132.68. This suggests that the stock is fairly valued at current levels, and investors may want to wait for a better entry point.
Sign up to view all
PCAR 12-Month Price Forecast
The AI assessment is neutral, reflecting the balance between Paccar's strong fundamentals and the cyclical downturn. The stock is not a clear buy or sell, but rather a hold for investors with a long-term perspective. If revenue growth turns positive and margins stabilize, the stance would upgrade to bullish. Conversely, if the downturn worsens and the dividend is cut, the stance would downgrade to bearish.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on PACCAR's 12-month outlook, with a consensus price target around $139.59 and implied upside of +5.7% versus the current price.
Average Target
$139.59
0 analysts
Implied Upside
+5.7%
vs. current price
Analyst Count
—
covering this stock
Price Range
$110 - $164
Analyst target range
Paccar has coverage from 16 analysts, with a consensus recommendation of 'Buy' and a mean recommendation score of 2.42 (where 1 is Strong Buy and 5 is Sell). The average target price is $139.28, implying an upside of approximately 5.0% from the current price of $132.68. The distribution includes 10 analysts with Buy or Overweight ratings, 5 with Hold, and 1 with Sell, indicating a generally bullish sentiment. The target price range spans from a low of $110.47 to a high of $164.00. The wide spread of $53.53 reflects significant uncertainty about the timing and strength of the cyclical recovery. The low target suggests concerns about prolonged downturn or margin compression, while the high target assumes a robust recovery and potential multiple expansion. Recent ratings actions have been mostly neutral, with JP Morgan maintaining Overweight and Truist Securities holding at Hold, while Freedom Broker downgraded from Buy to Hold in March 2026. This mixed activity indicates that analysts are cautiously optimistic but not aggressively upgrading the stock.
Bulls vs Bears: PCAR Investment Factors
Paccar presents a classic cyclical investment dilemma: strong fundamentals and market leadership are offset by a cyclical downturn and premium valuation. The bull case rests on the company's dominant position, robust cash flow, and conservative balance sheet, which should enable it to weather the downturn and benefit from an eventual recovery. The bear case highlights the sharp revenue decline, margin compression, and the risk that the stock is overvalued relative to trough earnings. Currently, the evidence slightly favors the bull case given the company's financial strength and the market's anticipation of a recovery, but the key tension is whether the cyclical downturn will be shallow and short-lived or deep and prolonged. If truck demand recovers faster than expected, the stock could re-rate higher; if not, the premium valuation could compress significantly.
Bullish
- Dominant Market Position: Paccar commands a 30% share of the North American Class 8 truck market and 15% of the European heavy-duty market, providing significant pricing power and scale advantages. This leadership position is a key moat that supports long-term profitability.
- Strong Cash Generation: In Q1 2026, Paccar generated $972 million in operating cash flow and $825 million in free cash flow, demonstrating robust cash generation even during a cyclical downturn. This financial strength supports continued dividend payments and strategic investments.
- Conservative Balance Sheet: Paccar has zero debt-to-equity and a current ratio of 1.70, indicating a very conservative capital structure. This low leverage provides financial flexibility to weather industry downturns and fund growth initiatives without distress.
- Attractive Dividend Yield: With a dividend yield of 3.94% and a payout ratio of 95.4%, Paccar returns significant cash to shareholders. The high payout ratio, while limiting reinvestment, underscores management's commitment to shareholder returns.
Bearish
- Cyclical Revenue Decline: Revenue fell 16.2% year-over-year in Q1 2026 to $6.23 billion, with sequential declines from $7.51 billion in Q2 2025. This indicates a clear cyclical downturn in truck demand, which could persist if freight volumes remain weak.
- Margin Compression: Gross margin contracted from 17.7% in Q1 2025 to 13.1% in Q1 2026, and operating margin fell from 11.9% to 9.0%. This reflects pricing pressure and lower volumes, which could further erode profitability if the downturn deepens.
- Premium Valuation: The trailing PE of 24.2x is near the high end of its historical range (9x-25x), and the EV/EBITDA of 12.2x is above typical industrial averages. This premium valuation leaves little room for disappointment, especially if earnings continue to decline.
- High Payout Ratio Limits Flexibility: With a payout ratio of 95.4%, Paccar retains very little earnings for reinvestment or to cushion against unexpected downturns. This could constrain future growth investments or force dividend cuts if earnings deteriorate further.
PCAR Technical Analysis
Paccar's stock is in a strong uptrend, with a 1-year price change of +34.35%, significantly outperforming the S&P 500's +18.19% over the same period. The current price of $132.68 sits near the upper end of its 52-week range, at approximately 95% of the range (from a low of $92.25 to a high of $139.24). This positioning near the highs suggests strong momentum, though it also raises the risk of overextension. The stock has recovered from a mid-May low of $109.34 and is now approaching its 52-week high, indicating bullish sentiment.
Beta
0.98
0.98x market volatility
Max Drawdown
-15.6%
Largest decline past year
52-Week Range
$92-$139
Price range past year
Annual Return
+35.6%
Cumulative gain past year
| Period | PCAR Return | S&P 500 |
|---|---|---|
| 1m | +6.1% | +2.8% |
| 3m | +15.5% | +4.2% |
| 6m | +3.7% | +11.3% |
| 1y | +35.6% | +21.5% |
| ytd | +18.4% | +12.7% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
PCAR Fundamental Analysis
Paccar's revenue has been declining, with the most recent quarter (Q1 2026) showing revenue of $6.23 billion, a 16.2% year-over-year decrease. This follows a trend of sequential declines from $7.51 billion in Q2 2025 to $6.67 billion in Q3 2025 and $6.82 billion in Q4 2025, indicating a clear cyclical downturn in truck demand. The company's parts and financial services segments, which are less cyclical, provide some offset, but the overall revenue trajectory is negative. Despite the revenue decline, Paccar remains highly profitable, with Q1 2026 net income of $605 million and a net margin of 9.7%. Gross margin has compressed from 17.7% in Q1 2025 to 13.1% in Q1 2026, reflecting pricing pressure and lower volumes. Operating margin also declined to 9.0% from 11.9% a year earlier, but the company still generates substantial earnings. Paccar's balance sheet is solid, with a current ratio of 1.70 and zero debt-to-equity, indicating conservative leverage. The company generated $972 million in operating cash flow and $825 million in free cash flow in Q1 2026, demonstrating strong cash generation even in a downturn. ROE stands at 12.3%, and the company has a payout ratio of 95.4%, returning significant cash to shareholders through dividends.
Quarterly Revenue
$6.2B
2026-03
Revenue YoY Growth
-16.2%
YoY Comparison
Gross Margin
13.1%
Latest Quarter
Free Cash Flow
$3.3B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
Open an Account, get $2 TSLA now!
Valuation Analysis: Is PCAR Overvalued?
Given Paccar's positive net income, the PE ratio is the primary valuation metric. The trailing PE is 24.2x, while the forward PE is 18.7x, implying the market expects earnings to grow. The gap between trailing and forward PE suggests an anticipated earnings recovery, which aligns with the cyclical nature of the truck industry. Paccar's valuation is at a premium to the broader market, with a PS ratio of 2.03x and a PB ratio of 2.99x. The EV/EBITDA multiple is 12.2x, which is higher than the typical industrial average, reflecting the market's confidence in the company's long-term prospects. Historically, Paccar's PE has ranged from around 9x to 25x over the past few years. The current trailing PE of 24.2x is near the higher end of this range, suggesting the stock is trading at a premium to its own historical average. This could indicate that the market is pricing in an optimistic recovery in earnings, or that the stock is overvalued relative to its cyclical trough earnings. The PEG ratio is negative due to expected earnings decline, but this is not meaningful in a cyclical downturn.
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 are moderate but manageable. Paccar's revenue has declined 16.2% year-over-year, and gross margins have compressed from 17.7% to 13.1%, indicating pricing pressure and lower volumes. The high payout ratio of 95.4% leaves little retained earnings for reinvestment, but the company's zero debt and strong free cash flow of $825 million in Q1 2026 provide a cushion. The main financial risk is that if the downturn persists, margins could erode further, and the company might be forced to cut its dividend, which would be a negative signal to investors.