PACCAR Q4 Earnings Preview: Mixed Signals Ahead

PACCAR prepares for its Q4 earnings release with mixed expectations. Although projected EPS shows a slight improvement, revenues are expected to decline significantly compared to last year, raising concerns about performance.

Date: 28-01-2025

AI Rating: 5

PACCAR's earnings potential looks mixed ahead of the fourth quarter of 2024 as it prepares to announce its results. The Zacks Consensus Estimate for earnings per share (EPS) is at $1.68, while the revenue estimate is set at $7.44 billion. While the EPS consensus has increased slightly over the past month, concerns loom over a significant year-over-year decline in both revenue and net income.

The report indicates that PACCAR expects a 13.4% contraction in revenues and a substantial 37.8% drop in net income compared to the previous year. This drop raises potential red flags regarding the overall health of PACCAR as a company.

Over the trailing four quarters, the company had a solid performance, beating earnings estimates three times with an average surprise of 7%. However, the upcoming results and guidance indicate challenges ahead. The anticipated decline in truck deliveries, dropping to approximately 42,000 units from 51,100 units, is indicative of decreasing demand which could significantly impact revenues from the Trucks segment, projected at $5.6 billion, down by 19.7% year-over-year.

On a positive note, PACCAR's Parts segment shows resilience with estimated revenues of $1.6 billion, reflecting a growth of 4% year-over-year. This segment's growth could help offset some losses from the Trucks segment. Furthermore, the expected revenues from the Financial Services segment indicate strong growth of over 21% year-over-year, which is another bright spot for the company.

PACCAR's current situation presents both risks and opportunities. Investors should closely monitor the expected earnings release, especially considering the earnings beat predictions stemming from a 1.19% Earnings ESP and a Zacks Rank of 2 (Buy), highlighting a potential for exceeding current estimates despite the general contraction in major revenue segments.

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