What happened
Paccar (PCAR +1.29%) beat estimates on both sales and earnings, and analysts believe the company can continue to outperform in 2023. That pushed shares of the truck manufacturer into the fast lane, with the stock up as much as 13% for the week, according to data provided by S&P Global Market Intelligence.
So what
It has been a strange few years for truckers and the companies that supply them. Demand for shipping services was strong during the pandemic, but has fallen off in recent quarters as fears of a slowing economy have caused companies to scale back purchases. Meanwhile, supply chain issues have limited manufacturing capabilities.
Paccar's latest quarterly results suggest the company is navigating through the uncertainty well. On Tuesday, Paccar announced it had earned $2.64 per share in the fourth quarter on revenue of $8.13 billion. That's well above the $2.21 per share in earnings on sales of $7.11 billion that analysts had expected. The sales number was particularly impressive, up more than 20% from the same three months a year ago.
For the full year, Paccar recorded record figures in terms of both revenue and net income.
"Paccar's excellent results reflect the strong demand for premium-quality DAF, Peterbilt, and Kenworth new truck models worldwide, record aftermarket parts profits, and strong financial services performance," CEO Preston Feight said in a statement.
NASDAQ: PCAR
Key Data Points
Now what
The quarter was great, but the real enthusiasm from Wall Street came because investors believe it is sustainable. The company forecasted steady, strong growth throughout 2023, upping its forecast for total U.S. and Canadian truck retail sales by 10,000 units to 270,000 to 310,000. That's compared to 283,500 units sold in 2022.
Analysts are buying in. Felix Boeschen of Raymond James raised his price target to $130 post-earnings, saying that Paccar shares represent a compelling way to play "offense and defense" in a volatile market.
Paccar shares are now up nearly 20% over the past year, beating the S&P 500 by nearly 30 percentage points, but they still don't look expensive relative to historical averages. Demand for trucks could falter if the economy gets significantly worse and buyers need to pull back further, but Paccar's more fuel-efficient powertrains are well positioned to outperform the wider market.
Given all the uncertainty out there, investors appear to see Paccar as a relative safe haven for now.
