PACCAR Inc. (PCAR) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of Paccar (PCAR)? Shares have been on the move with the stock up 13.8% over the past month. The stock hit a new 52-week high of $112.89 in the previous session. Paccar has gained 13.4% since the start of the year compared to the -47.8% move for the Zacks Auto-Tires-Trucks sector and the -57.6% return for the Zacks Automotive - Domestic industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on January 24, 2023, Paccar reported EPS of $2.64 versus consensus estimate of $2.23.
For the current fiscal year, Paccar is expected to post earnings of $9.26 per share on $30.75 billion in revenues. This represents a 7.3% change in EPS on a 12.57% change in revenues. For the next fiscal year, the company is expected to earn $8.91 per share on $28.33 billion in revenues. This represents a year-over-year change of -3.82% and -7.86%, respectively.
Paccar may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Paccar has a Value Score of A. The stock's Growth and Momentum Scores are C and A, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 12.1X current fiscal year EPS estimates, which is not in-line with the peer industry average of 12.1X. On a trailing cash flow basis, the stock currently trades at 11.3X versus its peer group's average of 11.3X. Additionally, the stock has a PEG ratio of 1.21. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Paccar currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Paccar meets the list of requirements. Thus, it seems as though Paccar shares could have a bit more room to run in the near term.
How Does PCAR Stack Up to the Competition?
Shares of PCAR have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Fox Factory Holding Corp. (FOXF). FOXF has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of B, and a Momentum Score of F.
Earnings were strong last quarter. Fox Factory Holding Corp. beat our consensus estimate by 5.47%, and for the current fiscal year, FOXF is expected to post earnings of $5.77 per share on revenue of $1.58 billion.
Shares of Fox Factory Holding Corp. have gained 18.2% over the past month, and currently trade at a forward P/E of 18.93X and a P/CF of 19.35X.
The Automotive - Domestic industry may rank in the bottom 71% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for PCAR and FOXF, even beyond their own solid fundamental situation.
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