Why Paccar Inc. Stock Could Rally 20%

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Why Paccar Inc. Stock Could Rally 20%

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1 Strong industry fundamentals

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Paccar delivered 41,600 trucks in the second quarter – an 8% increase year over year Rising truck deliveries

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Near-record freight tonnage in the U.S. Strong housing and automotive markets Improved demand from Europe – Paccar’s DAF brand reported a 60% jump in Q2 order intake What’s fueling demand?

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Paccar’s projections for 2015

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The U.S. and Canada, together with Europe, made up 87% of Paccar’s total truck sales in 2014. Why that’s important

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2 Growing market share

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Substantial growth over the years Source: Paccar Q2 Investor Presentation

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U.S. and Canadian heavy-duty truck market: 28% Europe heavy-duty market: 15%, up from 13.8% last year Year-to-date market share

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Strong brand name Innovative leadership Extensive dealership network Leadership in the natural-gas vehicle market What’s helping Paccar grow

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Trucks move nearly 70% of the freight tonnage in the U.S. A stronger foothold in such an essential industry is a key competitive advantage for Paccar. Why that’s important

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3 On track to a strong growth year

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Revenue grew 11% year over year Net income surged 40% year over year to hit record high Gross margin climbed to 15.1% from 12.8% a year ago Paccar delivered a solid Q2

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On track to a strong year Source: Paccar Q2 Investor Presentation

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2014 was a record year for Paccar in terms of revenue, and second-best in terms of net income. The company looks poised to deliver another strong year. Why that’s important

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Now that’s certainly a bargain! Analysts estimate Paccar’s earnings to grow a staggering 23% this year, outperforming the industry. For the potential growth, the stock costs only 12 times forward earnings today.

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