Latest news with #PrestonFeight
Yahoo
4 days ago
- Business
- Yahoo
The 5 Most Interesting Analyst Questions From PACCAR's Q1 Earnings Call
PACCAR's first quarter results were met with a negative market reaction, reflecting challenges in navigating tariff-driven input cost increases and softer market conditions. Management cited that higher costs, largely tied to recently imposed tariffs, could not be fully offset by pricing during the quarter. CEO Preston Feight noted, 'Our teams in Denton and Chillicothe have done a great job building trucks for us for the U.S. markets, but there are components that come into those factories from our suppliers, from other countries. And so we don't know how they would be affected.' The company pointed to continued strength in its parts and financial services businesses but acknowledged that truck divisions faced margin pressure. Is now the time to buy PCAR? Find out in our full research report (it's free). Revenue: $6.91 billion vs analyst estimates of $6.97 billion (16% year-on-year decline, 0.8% miss) Adjusted EPS: $1.46 vs analyst expectations of $1.58 (7.5% miss) Adjusted EBITDA: $863.7 million vs analyst estimates of $946.5 million (12.5% margin, 8.7% miss) Operating Margin: 11.1%, down from 15.9% in the same quarter last year Organic Revenue fell 14.6% year on year (1.5% in the same quarter last year) Market Capitalization: $48.17 billion While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Charles Dillard (Bernstein): Asked for detail on how much tariff costs can be passed through to customers and the timing of margin recovery; CEO Preston Feight said the ability to offset tariffs depends on pricing actions and backlog timing, with full recovery taking time as policies evolve. Jamie Cook (Truist): Questioned the root causes of margin disappointment and comfort with inventory levels; Feight clarified that margin pressure mainly stemmed from tariff-related cost increases not fully priced in, while inventories were described as manageable given product mix. Michael Feniger (Bank of America): Inquired about the impact of upcoming EPA emissions changes on cost structure and R&D spend; Feight explained that depending on regulatory outcomes, cost impacts could vary, but PACCAR is prepared with multiple compliant engine options. Tami Zakaria (JPMorgan): Sought clarification on how tariffs affect parts margins and pass-through ability; CFO Harrie Schippers explained that parts pricing can be adjusted more quickly than trucks, so margin impact in this segment is limited. Scott Group (Wolfe Research): Asked whether margin compression in Q2 is a timing issue or reflects limited pricing power; Feight described the main issue as timing between cost increases from tariffs and the later realization of price increases. In the coming quarters, the StockStory team will be monitoring (1) the outcome of ongoing tariff policy investigations and potential changes in U.S. trade restrictions, (2) PACCAR's ability to implement and sustain price increases across its truck and parts businesses, and (3) signs of stabilization or improvement in truck demand—particularly in the North American and European markets. Progress on connected vehicle initiatives and capacity expansions will also be important factors shaping the company's longer-term outlook. PACCAR currently trades at $93.51, up from $92.06 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it's free). Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
Yahoo
13-05-2025
- Automotive
- Yahoo
PCAR Q1 Earnings Call: Tariff Uncertainty and Margin Pressure Shape Outlook
Trucking company PACCAR (NASDAQ:PCAR) fell short of the market's revenue expectations in Q1 CY2025, with sales falling 16% year on year to $6.91 billion. Its non-GAAP profit of $1.46 per share was 7.5% below analysts' consensus estimates. Is now the time to buy PCAR? Find out in our full research report (it's free). Revenue: $6.91 billion vs analyst estimates of $6.97 billion (16% year-on-year decline, 0.8% miss) Adjusted EPS: $1.46 vs analyst expectations of $1.58 (7.5% miss) Adjusted EBITDA: $863.7 million vs analyst estimates of $946.5 million (12.5% margin, 8.7% miss) Operating Margin: 11.1%, down from 15.9% in the same quarter last year Free Cash Flow Margin: 10.7%, down from 15.5% in the same quarter last year Organic Revenue fell 14.6% year on year (1.5% in the same quarter last year) Market Capitalization: $50.26 billion PACCAR's first quarter results reflected operational challenges related to tariffs and evolving market conditions. Management attributed the revenue and margin declines to the impact of new tariffs on truck components and persistent cost pressures, noting that pricing actions were not sufficient to fully offset these headwinds within the quarter. CEO Preston Feight highlighted, 'Our teams in Denton and Chillicothe have done a great job building trucks for us for the U.S. markets, but there are components that come into those factories from our suppliers, from other countries. We don't know how they would be affected [by tariffs].' Looking ahead, PACCAR's leadership indicated that ongoing tariff policy investigations and changes in emissions regulations are likely to influence demand and profitability over the coming quarters. The company is preparing for a dynamic regulatory environment in both North America and Europe, with management expressing caution about future gross margins and emphasizing continued investment in technology and manufacturing capacity to support long-term growth. PACCAR's management discussed the main factors affecting first quarter performance, focusing on tariffs, product mix, and business segment updates. Margin pressure dominated the discussion, with input costs rising faster than prices and regulatory uncertainty clouding the near-term outlook. Tariff Impacts Drive Margins: New and existing tariffs on truck components increased input costs, which management could not fully offset with price increases during the quarter. The uncertainty around Section 232 investigations was cited as a key risk. Parts Segment Growth: PACCAR Parts achieved record revenues, benefiting from connected vehicle data and ongoing expansion of the parts distribution network. Management expects parts growth to continue, supported by higher pricing and improved customer uptime. Financial Services Resilience: PACCAR Financial Services delivered steady profitability, with portfolio growth and strong credit quality. Used truck demand and pricing improved, and further gains are anticipated as the year progresses. Vocational Truck Mix Advantage: The company's higher exposure to vocational trucks, which are typically used for specialized tasks such as construction, provided stability in sales despite softer conditions in long-haul trucking. Regulatory and Emission Standards: Management noted that potential changes to U.S. and European emissions regulations could alter product demand and cost structures, but stated confidence in PACCAR's technology preparedness to address these changes. Management's outlook for the next several quarters centers on tariff developments, customer demand for new emission-compliant vehicles, and the company's ability to manage costs and pricing in a shifting regulatory landscape. Tariff Policy Changes: Ongoing investigations into Section 232 truck tariffs could either worsen or improve cost pressures, making input costs and pricing power a key focus for upcoming quarters. Emission Regulation Shifts: Anticipated policy decisions on greenhouse gas and NOx standards, particularly in the U.S., may affect customer purchasing patterns and vehicle costs, with potential pre-buy activity ahead of new rules. Connected Services & Parts: Growth in digitally connected vehicle services and expansion of the parts business are expected to provide recurring revenue and margin stability, offsetting some cyclicality in new truck sales. Charles Dillard (Bernstein): Asked about the ability to pass through increased tariff costs to customers, with management confirming only partial pass-through in the short term and highlighting ongoing uncertainty about tariff policy. Jamie Cook (Truist): Sought clarity on margin disappointment versus expectations, to which management attributed margin compression to input cost inflation and the lag in pricing adjustments, especially with existing order backlogs. Michael Feniger (Bank of America): Inquired about the impact of upcoming EPA emissions rules on cost structure and whether PACCAR would adjust spending or investments. Management explained that cost impacts will depend on the specific regulatory path taken. Tami Zakaria (JPMorgan): Questioned how tariffs would affect the parts business, with management noting that parts pricing can be adjusted more quickly than trucks, lessening margin risk relative to the new vehicle segment. Scott Group (Wolfe Research): Probed whether Q2 margin pressure was due to timing of price increases or underlying market weakness, and management responded that the timing mismatch between tariff costs and pricing actions was the primary driver. In the coming quarters, the StockStory team will monitor (1) the outcome of tariff policy reviews and any subsequent changes to input costs, (2) customer order trends in response to evolving emissions regulations, and (3) the pace of growth in the PACCAR Parts and Financial Services segments. We will also track management's ability to align pricing with cost inflation and the effect of any regulatory clarity on forward demand. PACCAR currently trades at a forward P/E ratio of 16.1×. At this valuation, is it a buy or sell post earnings? See for yourself in our free research report. The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years. Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today. Sign in to access your portfolio
Yahoo
29-04-2025
- Automotive
- Yahoo
PACCAR (NASDAQ:PCAR) Misses Q1 Sales Targets, Stock Drops
Trucking company PACCAR (NASDAQ:PCAR) missed Wall Street's revenue expectations in Q1 CY2025, with sales falling 16% year on year to $6.91 billion. Its non-GAAP profit of $1.46 per share was 7.5% below analysts' consensus estimates. Is now the time to buy PACCAR? Find out in our full research report. Revenue: $6.91 billion vs analyst estimates of $6.97 billion (16% year-on-year decline, 0.8% miss) Adjusted EPS: $1.46 vs analyst expectations of $1.58 (7.5% miss) Operating Margin: 12.7%, down from 15.9% in the same quarter last year Free Cash Flow Margin: 10.8%, down from 15.5% in the same quarter last year Market Capitalization: $48.31 billion BELLEVUE, Wash.--(BUSINESS WIRE)--'PACCAR reported strong annual revenues and net income in 2024,' said Preston Feight, chief executive officer. Founded more than a century ago, PACCAR (NASDAQ:PCAR) designs and manufactures commercial trucks of various weights and sizes for the commercial trucking industry. A company's long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Unfortunately, PACCAR's 5.9% annualized revenue growth over the last five years was tepid. This wasn't a great result compared to the rest of the industrials sector, but there are still things to like about PACCAR. We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. PACCAR's recent performance shows its demand has slowed as its annualized revenue growth of 1.7% over the last two years was below its five-year trend. We also note many other Heavy Transportation Equipment businesses have faced declining sales because of cyclical headwinds. While PACCAR grew slower than we'd like, it did do better than its peers. This quarter, PACCAR missed Wall Street's estimates and reported a rather uninspiring 16% year-on-year revenue decline, generating $6.91 billion of revenue. Looking ahead, sell-side analysts expect revenue to decline by 3.1% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and implies its products and services will see some demand headwinds. At least the company is tracking well in other measures of financial health. Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we've identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link. Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals. PACCAR has been an efficient company over the last five years. It was one of the more profitable businesses in the industrials sector, boasting an average operating margin of 12.5%. Looking at the trend in its profitability, PACCAR's operating margin rose by 5 percentage points over the last five years, as its sales growth gave it operating leverage. This quarter, PACCAR generated an operating profit margin of 12.7%, down 3.2 percentage points year on year. This contraction shows it was less efficient because its expenses increased relative to its revenue. Revenue trends explain a company's historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions. PACCAR's EPS grew at a remarkable 11.8% compounded annual growth rate over the last five years, higher than its 5.9% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded. Diving into PACCAR's quality of earnings can give us a better understanding of its performance. As we mentioned earlier, PACCAR's operating margin declined this quarter but expanded by 5 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; taxes and interest expenses can also affect EPS but don't tell us as much about a company's fundamentals. Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business. For PACCAR, its two-year annual EPS growth of 1.7% was lower than its five-year trend. This wasn't great, but at least the company was successful in other measures of financial health. In Q1, PACCAR reported EPS at $1.46, down from $2.27 in the same quarter last year. This print missed analysts' estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects PACCAR's full-year EPS of $7.09 to shrink by 16.2%. Both revenue and EPS missed. Overall, this was a weaker quarter. The stock traded down 6.7% to $85.85 immediately after reporting. PACCAR didn't show it's best hand this quarter, but does that create an opportunity to buy the stock right now? We think that the latest quarter is just one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it's free. Sign in to access your portfolio
