PACCAR
PCAR
$126.67
+2.86%
Paccar Inc is a leading global manufacturer of medium- and heavy-duty trucks, operating under premium brands Kenworth, Peterbilt, and DAF, and also provides financial services and aftermarket parts. The company commands a dominant 30% share of the North American Class 8 truck market and 15% of the European heavy-duty market, distinguishing itself through a strong dealer network and a growing parts business. Investor attention is currently focused on Paccar's ability to navigate a cyclical downturn in truck demand, as evidenced by recent revenue declines, while capitalizing on its expanding parts and financial services segments for more stable growth. The stock has also benefited from broader industrial sector momentum tied to AI infrastructure and infrastructure spending.…
PCAR
PACCAR
$126.67
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 $128.19 and implied upside of +1.2% versus the current price.
Average Target
$128.19
0 analysts
Implied Upside
+1.2%
vs. current price
Analyst Count
—
covering this stock
Price Range
$109 - $155
Analyst target range
Paccar is covered by 16 analysts, with a consensus recommendation of 'Buy' (mean rating 2.42 on a 1-5 scale, where 1 is Strong Buy). The average target price is $128.19, implying approximately 4.1% upside from the current price of $123.15. The distribution shows 5 'Overweight' or 'Buy' ratings from firms like JP Morgan and Evercore ISI, while others like Truist and Citigroup rate it 'Hold' or 'Neutral', indicating a cautiously bullish consensus. The target range spans from a low of $109.00 to a high of $155.00, representing a wide spread of $46 (42% of the low), signaling high uncertainty about the timing and magnitude of the cyclical recovery. The high target of $155 implies a 26% upside and likely assumes a strong rebound in truck demand and margin expansion, while the low target of $109 (-11% downside) prices in a prolonged downturn or competitive pressures. Recent ratings actions show stability, with no major downgrades or upgrades in the past three months, suggesting analysts are waiting for clearer signs of a demand recovery.
Bulls vs Bears: PCAR Investment Factors
Paccar presents a classic cyclical investment debate: a premium-quality company with a fortress balance sheet, dominant market share, and strong cash flow, but facing a severe cyclical downturn that has compressed margins and revenues. The bull case rests on a recovery in truck demand, supported by infrastructure spending and AI-related industrial activity, which would validate the current forward P/E of 18x. The bear case warns that the trailing P/E of 24.2x is near historical highs and that the cyclical trough could be deeper or longer than expected, leading to further earnings disappointment and multiple compression. The single most important tension is the timing and magnitude of the truck cycle recovery: if it materializes in the next 12 months, the stock offers upside to the $128 analyst target; if it does not, the stock could fall to the $109 low target or below.
Bullish
- Dominant Market Share and Brand Strength: Paccar commands 30% of the North American Class 8 truck market and 15% of the European heavy-duty market, providing pricing power and scale advantages. Its premium Kenworth, Peterbilt, and DAF brands are deeply trusted by fleet operators, supporting recurring revenue.
- Fortress Balance Sheet with Zero Debt: Paccar has a debt-to-equity ratio of 0.0 and a current ratio of 1.70, indicating exceptional financial stability. This allows the company to invest through cycles and return capital to shareholders, evidenced by a 3.94% dividend yield.
- Strong Free Cash Flow Generation: Trailing twelve-month free cash flow is $3.27 billion, yielding 5.7% relative to market cap. This cash generation supports dividends, buybacks, and strategic investments even during a cyclical downturn.
- Growing Parts and Financial Services Segments: The parts business (20% of sales) and financial services (6% of sales) provide more stable, higher-margin revenue streams that partially offset truck cyclicality. Parts margins are typically above corporate average, aiding margin resilience.
Bearish
- Sharp Revenue Decline and Margin Compression: Q1 2026 revenue fell 16.2% YoY to $6.23 billion, and gross margin collapsed from 20.4% in Q2 2024 to 13.1% in Q1 2026. Net margin dropped from 12.8% to 9.7%, indicating significant operating deleverage.
- Cyclical Downturn in Truck Demand: The truck segment (74% of sales) is highly cyclical, and current weakness is evident in declining quarterly revenues from $8.77B (Q2 2024) to $6.23B (Q1 2026). A prolonged downturn could further pressure earnings and valuation.
- Elevated Trailing P/E Near Historical Highs: The trailing P/E of 24.2x is near the top of its historical range (9.0x to 25.8x), suggesting the market is pricing in an optimistic recovery. If the recovery disappoints, multiple compression could lead to significant downside.
- Negative PEG Ratio Signals Overvaluation Risk: The PEG ratio is -0.56 due to declining earnings, indicating that the current P/E is not supported by near-term growth. This is a warning sign that the stock may be overvalued relative to its earnings trajectory.
PCAR Technical Analysis
Paccar is in a sustained uptrend over the past year, with a 1-year price change of +29.45%, significantly outperforming the S&P 500's +20.92%. The current price of $123.15 sits at 73.5% of its 52-week range ($92.25 low to $131.88 high), indicating the stock is in the upper half of its range but not overextended, suggesting room for further upside if momentum continues. Short-term momentum shows a mixed picture: the 1-month change is +2.04% (outperforming the S&P 500's +0.6%), while the 3-month change is -0.98% (underperforming the S&P 500's +6.29%). This divergence suggests a recent short-term recovery from a pullback, but the longer-term trend remains intact. The stock's beta of 0.976 indicates volatility roughly in line with the market, making it a relatively stable industrial holding. Key support is at the 52-week low of $92.25, while resistance is at the 52-week high of $131.88. A breakout above $131.88 would signal renewed bullish momentum, while a breakdown below $92.25 would indicate a trend reversal. The stock's low beta suggests it is less sensitive to broad market swings, which may appeal to risk-averse investors.
Beta
0.98
0.98x market volatility
Max Drawdown
-15.6%
Largest decline past year
52-Week Range
$92-$132
Price range past year
Annual Return
+32.8%
Cumulative gain past year
| Period | PCAR Return | S&P 500 |
|---|---|---|
| 1m | +4.7% | +0.1% |
| 3m | +0.3% | +5.7% |
| 6m | +4.4% | +8.5% |
| 1y | +32.8% | +20.3% |
| ytd | +13.5% | +10.1% |
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PCAR Fundamental Analysis
Paccar's revenue trajectory has decelerated sharply, with Q1 2026 revenue of $6.23 billion down 16.2% year-over-year, following a trend of declining quarterly revenues from $8.77 billion in Q2 2024 to $6.23 billion in Q1 2026. The truck segment (74% of sales) is the primary drag, reflecting cyclical weakness in heavy-duty truck demand, while the parts business (20% of sales) provides some stability. The company remains profitable, with Q1 2026 net income of $605 million and a net margin of 9.7%, though margins have compressed from 12.8% in Q2 2024. Gross margin fell to 13.1% in Q1 2026 from 20.4% in Q2 2024, indicating pricing pressure or higher input costs. Paccar maintains a fortress balance sheet with zero debt-to-equity and a current ratio of 1.70, indicating ample liquidity. Free cash flow generation is strong at $825 million in Q1 2026, and the trailing twelve-month free cash flow of $3.27 billion provides a robust FCF yield of 5.7% relative to market cap. Return on equity (ROE) stands at 12.3%, reflecting efficient capital use despite the cyclical downturn.
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
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Valuation Analysis: Is PCAR Overvalued?
Since Paccar has positive net income, the primary valuation metric is the P/E ratio. The trailing P/E is 24.2x, while the forward P/E is 18.0x, implying the market expects earnings to recover in the coming year. The gap between trailing and forward P/E suggests that earnings are expected to rebound from the current cyclical trough. Compared to the industrial machinery sector, Paccar's trailing P/E of 24.2x is at a premium to the industry average (not provided, but typically around 15-20x), reflecting its market leadership and strong brand. The P/S ratio of 2.03x is also elevated relative to historical norms. Historically, Paccar's trailing P/E has ranged from 9.0x (Q4 2023) to 25.8x (Q4 2025), and the current 24.2x is near the top of its historical band, indicating the market is pricing in optimistic expectations for a cyclical recovery. The PEG ratio is negative (-0.56) due to declining earnings, which is a warning sign that the current valuation may not be supported by near-term growth.
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
12.2x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: Paccar's revenue has declined 16.2% YoY in Q1 2026, and gross margin has halved from 20.4% in Q2 2024 to 13.1%, reflecting severe operating deleverage. Net income fell to $605 million from $1.12 billion in the prior year period, and net margin compressed from 12.8% to 9.7%. The company's high payout ratio of 95.4% leaves minimal retained earnings for reinvestment, and a further earnings decline could jeopardize the dividend. However, zero debt and a current ratio of 1.70 provide a liquidity buffer.
Market & Competitive Risks: The stock's trailing P/E of 24.2x is near the top of its 5-year range (9.0x-25.8x), making it vulnerable to valuation compression if the cyclical recovery disappoints. With a beta of 0.98, Paccar is roughly as volatile as the market, but its industrial cyclicality means it could underperform in a recession. The 30% North American market share faces competitive threats from OEMs like Daimler and Volvo, and regulatory shifts toward electric trucks could disrupt the traditional powertrain business. Recent news highlights AI infrastructure spending as a tailwind for industrial stocks, but this is tangential to Paccar's core truck demand.
Worst-Case Scenario: A prolonged recession or freight recession could extend the truck demand downturn, causing further revenue declines and margin erosion. If earnings fall below $5.00 per share, the trailing P/E could contract to 20x, driving the stock to $100 or lower. The 52-week low is $92.25, representing a potential 25% downside from the current price of $123.15. In a severe scenario, the stock could test $90, a 27% loss.