5 Reasons Paccar Inc. Stock is a Strong Buy Now
-
Upload
the-motley-fool -
Category
Economy & Finance
-
view
4.036 -
download
2
Transcript of 5 Reasons Paccar Inc. Stock is a Strong Buy Now
5 Reasons Paccar Inc. Stock Is a Strong Buy Now
Image source: PACCAR
1 Solid earnings growth despite challenges
At record highsPaccar’s revenue and net income hit record
highs in 2015
Source: Paccar Q4 Investor Presentation.
Rising freight tonnage, lower fuel prices in the U.S.Strong housing and automotive marketsImproving demand from Europe, Paccar’s second-largest marketAggressive cost control: Selling, general, and administrative expenses declined 4% in 2015
What’s driving sales and profits
2 Growing market share
Substantial growth over the years
Source: Paccar Q4 Investor Presentation.
U.S./Canada heavy-duty truck market: 27.4%U.S./Canada medium-duty truck market: Record high at 17.4%Europe heavy-duty market: 14.6%, up from 13.8% last year
2015 market share
Brand nameInnovative leadershipExtensive dealership networkStrong aftermarket parts distribution businessFinancing and leasing services
What’s fueling Paccar’s growth
3 Strong cash flows and a solid balance sheet
Record operating cash flow in 2015
Source: Paccar Q4 Investor Presentation.
Free cash flow: $831 millionCash and short-term investments balance: $3.4 billionInterest coverage ratio: 19 timesReturn on equity: 23%
Other vital stats for 2015
4 Rapidly rising dividends
Dividends at record high
Source: Paccar Q4 Investor Presentation.
Paccar increased its quarterly dividend by 9% in 2015. Including a special dividend, total dividends per share grew 25% last year.Paccar has paid a dividend every year since 1941.The company also has an ongoing share repurchase program.
Facts you should know
5 Attractive valuation
At multiyear lows
Paccar is currently trading at less than 12 times trailing earnings and free cash flow. That’s an attractive bargain for the growth potential that the company offers.
An opportunity
The next billion-dollar iSecret The world's biggest tech company forgot to show you something at its recent event, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-
new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early-in-
the-know investors! To be one of them, just click here.