PACCAR
PCAR
$131.03
+1.62%
Paccar Inc is a leading global manufacturer of medium- and heavy-duty trucks under the premium Kenworth, Peterbilt, and DAF nameplates, serving markets primarily in North America, Europe, and Australia, with a significant parts and financial services segment. The company commands roughly 30% of the North American Class 8 market and 15% of the European heavy-duty market, distinguishing itself through its premium brand positioning, extensive dealer network, and vertically integrated finance arm. Currently, investor attention is focused on Paccar's ability to navigate a cyclical downturn in truck demand, as evidenced by recent revenue declines, while also capitalizing on long-term growth drivers such as AI infrastructure spending and global urbanization, which have supported the stock's outperformance relative to the broader market.…
PCAR
PACCAR
$131.03
Investment Opinion: Should I buy PCAR Today?
Based on the analysis, PCAR is rated a 'Buy' with a thesis that its dominant market position, strong balance sheet, and attractive dividend provide a solid foundation for long-term value creation, despite near-term cyclical headwinds. The consensus analyst rating is 'Buy' with an average target price of $141.03, implying 7.6% upside, which supports this view.
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PCAR 12-Month Price Forecast
The AI assessment is neutral with medium confidence. While Paccar's strong market position and financial stability are positive, the near-term cyclical headwinds and rich valuation limit upside. The stock's performance will hinge on the timing and strength of the recovery in truck demand. If revenue growth turns positive and margins stabilize, the stance could upgrade to bullish; conversely, if the downturn persists, it could 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 $141.03 and implied upside of +7.6% versus the current price.
Average Target
$141.03
0 analysts
Implied Upside
+7.6%
vs. current price
Analyst Count
—
covering this stock
Price Range
$110 - $164
Analyst target range
Paccar is covered by 16 analysts, with a consensus recommendation of 'Buy' (mean rating 2.42, where 1 is Strong Buy and 5 is Sell). The average price target is $141.03, implying approximately 7.6% upside from the current price of $131.03. The distribution includes 10 Buy-equivalent ratings, 5 Hold, and 1 Sell, reflecting a generally bullish but not overly enthusiastic sentiment. The target range spans from a low of $110.47 to a high of $164.00, with the high target suggesting potential for significant upside if the cyclical recovery accelerates, while the low target reflects downside risks from continued demand weakness. Recent ratings actions have been mostly neutral, with no major upgrades or downgrades in the past six months, indicating a stable outlook among analysts.
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Bulls vs Bears: PCAR Investment Factors
Paccar presents a balanced risk/reward profile. The bull case is anchored by its dominant market position, robust balance sheet, and attractive dividend, while the bear case centers on cyclical revenue declines, margin compression, and a rich valuation. Currently, the evidence slightly favors the bulls due to the company's financial stability and long-term growth drivers, but the near-term outlook is clouded by the ongoing downturn. The most critical tension is whether the cyclical recovery in truck demand will materialize as expected; if it does, the stock could re-rate higher, but if it stalls, the high valuation and payout ratio could lead to underperformance.
Bullish
- Strong Market Position and Brand: Paccar commands roughly 30% of the North American Class 8 market and 15% of the European heavy-duty market, with premium brands Kenworth, Peterbilt, and DAF. This leadership provides pricing power and customer loyalty, supporting resilience during cyclical downturns.
- Solid Balance Sheet and Cash Flow: The company maintains a current ratio of 3.08 and generated $824.6 million in free cash flow in Q1 2026, despite revenue declines. This financial strength enables continued investment in new products and shareholder returns.
- Attractive Dividend Yield: With a dividend yield of 3.94% and a payout ratio of 95.4%, Paccar offers a substantial income component, appealing to income-focused investors. The high payout reflects management's confidence in earnings stability.
- Analyst Consensus Buy and Upside: The average analyst price target of $141.03 implies 7.6% upside from the current price of $131.03, with a consensus rating of 'Buy' (mean 2.42). The high target of $164 suggests potential for 25% upside if the cyclical recovery accelerates.
Bearish
- Revenue Decline and Cyclical Downturn: Q1 2026 revenue fell 16.2% year-over-year to $6.23 billion, continuing a downtrend from the Q2 2024 peak of $8.77 billion. This reflects a cyclical slowdown in truck demand, which could persist if freight volumes remain weak.
- Margin Compression: Gross margin dropped to 13.12% in Q1 2026 from 17.72% a year earlier, and operating margin fell to 8.97% from 11.89%. This compression indicates reduced pricing power and higher costs, pressuring profitability.
- High Valuation Relative to History: The trailing P/E of 24.23x is near the upper end of its historical range (8.98x to 25.83x) and above the industry average of 22x. This premium leaves limited room for multiple expansion and increases downside risk if earnings disappoint.
- High Payout Ratio Limits Flexibility: With a payout ratio of 95.4%, Paccar is returning nearly all earnings to shareholders, leaving little retained capital for organic growth or acquisitions. This could constrain strategic initiatives during a downturn.
PCAR Technical Analysis
Paccar's stock is in a strong uptrend over the past year, with a 1-year price change of +34.33%, significantly outperforming the S&P 500's +20.48% over the same period. The current price of $131.03 sits near the upper end of its 52-week range, at approximately 94% of the range (calculated as (131.03 - 92.25) / (139.24 - 92.25)), indicating robust momentum and bullish sentiment. This positioning near the highs suggests the market is rewarding the company's defensive qualities and growth prospects, though it also raises the risk of overextension in the near term.
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
+34.3%
Cumulative gain past year
| Period | PCAR Return | S&P 500 |
|---|---|---|
| 1m | -0.1% | +3.6% |
| 3m | +19.8% | +2.7% |
| 6m | +2.0% | +11.4% |
| 1y | +34.3% | +18.7% |
| ytd | +17.5% | +12.3% |
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PCAR Fundamental Analysis
Paccar's revenue has been declining, with the most recent quarter (Q1 2026) showing revenue of $6.234 billion, a 16.22% year-over-year decrease from $7.442 billion in Q1 2025. This marks a continuation of a downtrend from the peak of $8.78 billion in Q2 2024, reflecting a cyclical slowdown in truck demand. The revenue mix shows Truck, Parts, and Other at $6.4 billion (94% of total) and Financial Services at $542 million (6%), with the core truck segment driving the decline. Despite the revenue drop, the company remains highly profitable, with Q1 2026 net income of $605 million and EPS of $1.15, though margins have compressed—gross margin fell to 13.12% from 17.72% a year earlier, and operating margin dropped to 8.97% from 11.89%. The company's balance sheet remains solid, with a current ratio of 3.08, debt-to-equity of 0.81, and strong free cash flow generation of $824.6 million in Q1 2026, though the payout ratio of 95.4% indicates a high dividend payout that could limit flexibility.
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?
Given Paccar's positive net income, the trailing P/E ratio of 24.23x is the primary valuation metric, with a forward P/E of 18.36x, implying the market expects earnings growth. The gap between trailing and forward P/E suggests an anticipated recovery in earnings, consistent with analyst estimates of EPS growth. Compared to the industry average P/E of 22x (from valuation data), Paccar trades at a 10% premium, which may be justified by its strong brand, market share, and financial stability. Historically, Paccar's P/E has ranged from a low of 8.98x in Q2 2023 to a high of 25.83x in Q4 2025, and the current 24.23x is near the upper end of that range, indicating the market is pricing in optimistic expectations for a cyclical recovery.
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 significant. Paccar's revenue has declined 16.2% year-over-year in Q1 2026, and gross margins have compressed from 17.72% to 13.12% over the same period, indicating reduced profitability. The high payout ratio of 95.4% leaves minimal retained earnings for reinvestment, potentially limiting flexibility to weather a prolonged downturn. However, the balance sheet remains solid with a current ratio of 3.08 and debt-to-equity of 0.81, providing a cushion against financial distress.
