PACCAR Inc.

PACCAR had a strong first quarter and the company achieved revenues and net income that were well above market expectations, driven by strong demand for trucks, parts, and financial services. PACCAR’s revenues rose by 31% to $8.47 billion in the first quarter, while net income reached $734 million. Truck, Parts, and Other gross margins also reached a record high of 19.3% in the first quarter. PACCAR’s management attributes this growth to its investments in new truck models, global expansion, and the strong performance of PACCAR Parts. PACCAR Financial, the company’s financial services arm, also had an excellent quarter, achieving a pretax income of $149 million, similar to the same quarter of last year. Looking at the operating environment, the management expects modest growth in the US and European economies. The company is increasing its forecast for the US and Canadian Class 8 market to 280,000 to 320,000 trucks due to good freight tonnage and customer demand for high-performing Peterbilt and Kenworth trucks. In Europe, DAF’s excellent new trucks, equipped with the latest technology and best operating efficiencies, are in high demand, leading the company to raise its 2023 European market projection to 280,000 to 320,000 trucks. The company further expanded its partnership with Toyota Motor to develop zero-emission Kenworth and Peterbilt trucks fueled by Toyota’s latest hydrogen fuel cell modules. We give PACCAR a ‘Hold’ rating with a revised target price.