PACCAR IncPCAR

Morningstar Rating

Stock Research and Analysis

by Basili Alukos, CPA

Despite a deteriorating economic environment, we think PACCAR's operational prowess and strong brand name will help the diesel truck manufacturer survive the current downturn.

Although it began as a steel foundry, PACCAR has evolved over the past century Read more

Bulls Say

PACCAR has received numerous accolades from independent research firm J.D. Power and Associates during the last 15 years for the quality of its heavy- and medium-duty trucks. This reputation should bode well for gaining new customers and increasing sales.

The Kenworth and Peterbilt brands were awarded a U.S. Environmental Protection Agency designation because of their fuel-economy improvements, which we think should bolster sales and create customer goodwill.

PACCAR's brands are highly regarded by both freight companies and truck drivers. The company is able to charge premium prices for its trucks and achieve industry-leading operating margins. Read more

Bears Say

As the financial industry deleverages, PACCAR could have difficultly accessing capital in its financing business, which could depress results and hurt truck sales.

During the last year, PACCAR has increased inventory in order to meet the demand for customers prebuying before the new 2010 emissions standards. However, the newer engines are more fuel-efficient, and the firm's inventory buildup could be a losing preposition as a result.

Volkswagen's purchase of a controlling stake in Swedish truck maker Scania will create a stronger competitor in Europe. Volkswagen also has a stake in German truck maker MAN AG. Read more

Strategy

Management is vigilantly cutting costs and reining in spending to survive the current economic downturn. Longer term, management will strive to preserve its reputation as a high-quality manufacturer Read more

Management

Chairman and CEO Mark Pigott began his career with PACCAR in 1988, serving as vice president before succeeding his father as CEO in January 1997. Although the firm has tripled shareholder value under the compensation structure since 2002, we would like Read more

Profile

PACCAR is a leading designer and manufacturer of light-, medium-, and heavy-duty trucks and aftermarket distribution parts under the Kenworth, Peterbilt, and DAF nameplates. Read more

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