PACCAR Inc. PCAR is slated to release second-quarter 2022 results on Jul 26, before the opening bell. The Zacks Consensus Estimate for the quarter’s earnings and revenues is pegged at $1.80 per share and $6.51 billion, respectively.
The trucking giant came up with better-than-expected earnings in the last reported quarter on higher-than-anticipated revenues across all segments. Over the trailing four quarters, PACCAR beat earnings estimates thrice and missed on the other occasion, with the average surprise being 4.4%. This is depicted in the graph below:
PACCAR Inc. Price and EPS Surprise
PACCAR Inc. price-eps-surprise | PACCAR Inc. Quote
Trend in Estimate Revisions
The Zacks Consensus Estimate for second-quarter 2022 earnings per share has moved south by a cent over the past seven days. Nonetheless, the bottom-line projection implies a 27.6% increase on a year-over-year basis. The Zacks Consensus Estimate for revenues suggests 20.7% growth from the comparable year-ago period.
Factors to Note
PACCAR’s strong reputation for quality and leading brands — Kenworth, Peterbilt, and DAF — along with rising demand for Class 8 heavy trucks is anticipated to have aided second-quarter sales. Consequently, the consensus mark for revenues from the Trucks segment is pegged at $5,129 million, indicating an improvement from $4,152 million generated in the year-ago period.
Persistent growth in aftermarket parts — which are less cyclical and carry high margins — is likely to have supported the firm’s quarterly performance. The Zacks Consensus Estimate for revenues from the Parts segment is pegged at $1,393 million, indicating an increase from $1,211 million recorded in the corresponding year-ago period.
On the flip side, the Zacks Consensus Estimate for revenues from the Financial Services segment is pegged at $418 million, indicating a decline from $456 million generated in the year-ago period. Additionally, PACCAR is likely to have borne the brunt of the rising commodity prices, which, in turn, may have clipped gross margins. A tough labor market and logistical challenges are also likely to have negatively impacted the second-quarter earnings. Additionally, high R&D costs to support investments in innovative products and technology might have dented operating profits to some extent.
Overall, while potential revenue growth from the Trucks and Parts segments is likely to buoy PACCAR’s results, the projected year-over-year decline in revenues from the Financial Services unit along with manufacturing inefficiencies associated with supply-chain disruptions is anticipated to have played spoilsports.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for PACCAR for the to-be-reported quarter, as it does not have the right combination of the two key ingredients. A combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: PACCAR has an Earnings ESP of -2.66%. This is because the Most Accurate Estimate is pegged 4 cents below the Zacks Consensus Estimate.
Zacks Rank: It currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks With the Favorable Combination
While an earnings beat appears uncertain for PACCAR, here are a couple of players from the auto space, which, according to our model, have the right combination of elements to post an earnings beat for the quarter to be reported:
Lear Corporation LEA has an Earnings ESP of +7.58% and a Zacks Rank #3. The company is set to post second-quarter results on Aug 2.
The Zacks Consensus Estimate for Lear’s to-be-reported quarter’s earnings and revenues is pegged at $1.19 per share and $4.75 billion, respectively. LEA surpassed earnings estimates in three of the last four quarters and missed once, with the average being 6.53%.
BorgWarner BWA has an Earnings ESP of +0.41% and a Zacks Rank #3. The company is slated to release second-quarter results on Aug 3.
The Zacks Consensus Estimate for BorgWarner’s to-be-reported quarter’s earnings and revenues is pegged at 88 cents per share and $3.72 billion, respectively. BWA surpassed earnings estimates in each of the last four quarters, with the average being 33.1%.
Allison Transmission ALSN has an Earnings ESP of +0.28% and a Zacks Rank #3. The stock is set to report second-quarter 2022 earnings on Aug 3.
The Zacks Consensus Estimate for Allison’s to-be-reported quarter’s earnings and revenues is pegged at $1.35 per share and $698 million, respectively. Encouragingly, ALSN surpassed earnings estimates in the last four quarters, with the average being 11.7%.
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BorgWarner Inc. (BWA) : Free Stock Analysis Report
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