5 Reasons Paccar Inc. Stock is a Strong Buy Now
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Transcript of 5 Reasons Paccar Inc. Stock is a Strong Buy Now
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5 Reasons Paccar Inc. Stock Is a Strong Buy Now
Image source: PACCAR
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1 Solid earnings growth despite challenges
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At record highsPaccar’s revenue and net income hit record
highs in 2015
Source: Paccar Q4 Investor Presentation.
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Rising freight tonnage, lower fuel prices in the U.S.Strong housing and automotive marketsImproving demand from Europe, Paccar’s second-largest marketAggressive cost control: Selling, general, and administrative expenses declined 4% in 2015
What’s driving sales and profits
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2 Growing market share
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Substantial growth over the years
Source: Paccar Q4 Investor Presentation.
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U.S./Canada heavy-duty truck market: 27.4%U.S./Canada medium-duty truck market: Record high at 17.4%Europe heavy-duty market: 14.6%, up from 13.8% last year
2015 market share
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Brand nameInnovative leadershipExtensive dealership networkStrong aftermarket parts distribution businessFinancing and leasing services
What’s fueling Paccar’s growth
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3 Strong cash flows and a solid balance sheet
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Record operating cash flow in 2015
Source: Paccar Q4 Investor Presentation.
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Free cash flow: $831 millionCash and short-term investments balance: $3.4 billionInterest coverage ratio: 19 timesReturn on equity: 23%
Other vital stats for 2015
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4 Rapidly rising dividends
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Dividends at record high
Source: Paccar Q4 Investor Presentation.
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Paccar increased its quarterly dividend by 9% in 2015. Including a special dividend, total dividends per share grew 25% last year.Paccar has paid a dividend every year since 1941.The company also has an ongoing share repurchase program.
Facts you should know
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5 Attractive valuation
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At multiyear lows
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Paccar is currently trading at less than 12 times trailing earnings and free cash flow. That’s an attractive bargain for the growth potential that the company offers.
An opportunity
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