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Investors with a long-term horizong may find it valuable to assess PACCAR Inc's (NASDAQ:PCAR) earnings trend over time and against its industry benchmark as opposed to simply looking at a sincle earnings announcement at one point in time. Below is my commentary, albiet very simple and high-level, on how PACCAR is currently performing.
Check out our latest analysis for PACCAR
Were PCAR's earnings stronger than its past performances and the industry?
PCAR's trailing twelve-month earnings (from 31 December 2018) of US$2.2b has jumped 31% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 10%, indicating the rate at which PCAR is growing has accelerated. What's the driver of this growth? Let's take a look at if it is only a result of an industry uplift, or if PACCAR has seen some company-specific growth.
In terms of returns from investment, PACCAR has invested its equity funds well leading to a 26% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 8.3% exceeds the US Machinery industry of 7.6%, indicating PACCAR has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for PACCAR’s debt level, has increased over the past 3 years from 15% to 15%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 128% to 116% over the past 5 years.
What does this mean?
PACCAR's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. While PACCAR has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I recommend you continue to research PACCAR to get a better picture of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for PCAR’s future growth? Take a look at our free research report of analyst consensus for PCAR’s outlook.
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Financial Health: Are PCAR’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
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Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2018. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.