Now that Christmas is out of the way, it's time for that other "most wonderful time of the year" -- year-end earnings season, when those companies whose fiscal years align sensibly with the calendar version report their fourth-quarter and full-year results. Next up is large-truck maker Paccar (NASDAQ:PCAR), which reports on Tuesday.

What analysts say:

  • Buy, sell, or waffle? Fourteen analysts hitch along with Paccar. Two say to buy it, seven more advise you to hold it, and five think you should sell.
  • Revenues. On average, they're looking for 20% sales growth, to $4.13 billion.
  • Earnings. Profits are predicted to rise 25% to $1.53 per share.

What management says:
In last quarter's earnings report, CEO Mark Pigott termed Paccar's operating performance in the first three quarters of this year "excellent." Company president Tom Plimpton noted the achievement of record market share of 25.2% in the U.S., and DAF Trucks division president Aad Goudriaan put the firm's European market share at 14%.

So much for performance relative to competitors. In absolute terms, 2006 has been an exceptional year for Paccar, with North American Class 8 truck sales estimated at 315,000 units. The current year won't be quite as good in this regard. Management anticipates unit sales dropping to 200,000 to 230,000 in 2007 "as the industry adjusts to the higher component costs necessary to meet the EPA 2007 emission thresholds." In other words, buyers will suffer through some sticker shock this year. Going forward, however, Paccar sees "continued growth ... following a period of adjustment."

What management does:
Margin-wise, the table below shows what Paccar's been doing recently: holding gross margins steady, inching up the operating results, and ratcheting up net margins. Longer-term, I couldn't describe performance any better than it already did in its last earnings release: "Total return to shareholders is superior to the S&P 500 for the past one-, five-, ten-, fifteen- and twenty-year periods." Heck, that's better returns than legendary investor Bill Miller managed at Legg Mason (NYSE:LM) -- and these guys are truckers!

Margins

6/05

9/05

12/05

3/06

6/06

9/06

Gross

15.3%

15.4%

15.3%

15.4%

15.4%

15.4%

Operating

12.1%

12.3%

12.3%

12.4%

12.5%

12.6%

Net

7.7%

7.8%

8.1%

8.2%

8.7%

9.0%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Tom Gardner, who recommended Paccar to subscribers of our Motley Fool Stock Advisor newsletter, agrees with management on (at least) two points: First, that Paccar is "a phenomenally well-run company," and second, that "next year's results could be shaved by 40%." Truck operators have been buying in bulk this year to get in ahead of the new EPA standards. And naturally, a truck bought last year is a truck that needn't be bought this year, so Tom is looking for "softening sales" in 2007.

That said, he suggests that if the market overreacts to bad news (or unexpectedly weak guidance) on Tuesday, Paccar both can and should use some of the cash on its balance sheet to snap up shares on the cheap. The way I see it, that advice applies just as well to investors as to management. (To find out why, read Tom's write-up in Stock Advisor.)

Competitors:

  • DaimlerChrysler (NYSE:DCX)
  • Navistar (NYSE:NAV)
  • Rush Enterprises (NASDAQ:RUSHB)
  • Volvo (NASDAQ:VOLV)

For further Foolishness on Paccar and its peers:

Legg Mason is an Inside Value pick.

Fool contributor Rich Smith does not own shares of any company named above.