Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the ...

Core Insights - The North American medium and heavy-duty commercial vehicle (CV) electronic service tools (EST) market is experiencing gradual growth driven by advancements in vehicle complexity, focus on efficiency, and regulatory pressures [2][3][7] Market Dynamics - The market is influenced by stringent emissions regulations, such as the US EPA standards, which compel fleet operators to adopt advanced diagnostic tools for compliance [3][7] - Increasing complexity of heavy-duty truck systems necessitates sophisticated diagnostics software for optimal performance [2][8] - There is a growing demand for comprehensive fleet management solutions that provide real-time monitoring and diagnostics [9] Competitive Landscape - The market features a mix of OEMs and aftermarket companies, with key players including Cummins, Daimler Trucks North America, Volvo Group, PACCAR Inc., and Navistar International Corporation [4] - Aftermarket participants include Noregon Systems, Snap-on Inc., and Autel Intelligent Technology Corp. Ltd. [4] - The competitive dynamics have shifted, with an increasing average age of trucks leading to greater opportunities for aftermarket vendors [24] Emerging Trends - Key trends include the adoption of cloud-based solutions, shop automation, modularity, and product customization [5] - Innovative business models are emerging, such as product-as-a-service (PaaS) and technician as a service (TaaS) [18][19] - The market is witnessing technological disruptions due to the challenges faced by electric vehicles (EVs), prompting a shift towards alternative fuel engines [20][21] Growth Drivers - Stringent emission regulations are a significant driver for the demand for advanced diagnostic tools [7] - The rising complexity of truck systems increases the need for effective diagnosis and repair solutions [8] - Fleet management solutions are increasingly sought after to optimize performance and reduce costs [9] Growth Restraints - Integration issues with existing vehicle systems can pose challenges, especially for older models [13] - High initial investment and ongoing maintenance costs can impact long-term affordability [14] - Market saturation and product commoditization are leading to increased competition among established players [15][16] Key Competitors - Major competitors in the market include OEMs like Cummins, Daimler, Volvo, PACCAR, and Navistar, as well as aftermarket companies like Noregon Systems and Snap-on Inc. [26][28] - The competitive factors include technology development, product pricing, customer support, and distribution networks [28]

Company Performance - Paccar (PCAR) closed at $94.01, marking a +2.46% increase from the previous day, outperforming the S&P 500's gain of 1.11% [1] - Over the past month, Paccar's shares have depreciated by 1.6%, underperforming the Auto-Tires-Trucks sector's gain of 0.34% and the S&P 500's gain of 3.92% [1] Earnings Expectations - Paccar is expected to report EPS of $1.29, down 39.44% from the prior-year quarter, with a revenue estimate of $6.81 billion, indicating a 17.63% decrease from the same quarter last year [2] - For the entire fiscal year, earnings are projected at $5.72 per share and revenue at $27.75 billion, representing declines of -27.59% and -12.09% respectively from the prior year [3] Analyst Estimates and Rankings - Recent changes in analyst estimates for Paccar reflect evolving short-term business trends, with upward revisions indicating analysts' positivity towards the company's operations [4] - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), currently ranks Paccar at 5 (Strong Sell), with a recent EPS estimate increase of 0.35% [6] Valuation Metrics - Paccar has a Forward P/E ratio of 16.05, which is a premium compared to the industry average Forward P/E of 11.45 [7] - The company has a PEG ratio of 3.39, significantly higher than the Automotive - Domestic industry's average PEG ratio of 1.14 [7] Industry Context - The Automotive - Domestic industry, part of the Auto-Tires-Trucks sector, has a Zacks Industry Rank of 209, placing it in the bottom 16% of over 250 industries [8]

Core Insights - The company is well positioned to benefit from the sustained increase in e-commerce spending over the long term [1] Summary by Category - **Company Positioning** - The company is strategically aligned to capitalize on the growth in e-commerce spending, indicating a strong potential for future revenue growth [1] - **Market Trends** - There is a sustained increase in e-commerce spending, which is expected to continue over the long term, providing a favorable environment for the company [1]

Company Performance - Paccar (PCAR) stock closed at $93.56, reflecting a +1.95% increase from the previous day, outperforming the S&P 500's gain of 0.58% [1] - Over the past month, Paccar shares increased by 2.59%, which is below the Auto-Tires-Trucks sector's gain of 10.94% and the S&P 500's gain of 4.61% [1] Earnings Projections - Analysts expect Paccar to report an EPS of $1.29, indicating a 39.44% decline compared to the same quarter last year [2] - The Zacks Consensus Estimate for revenue is projected at $6.81 billion, down 17.63% from the previous year [2] - For the full year, earnings are projected at $5.72 per share and revenue at $27.75 billion, reflecting changes of -27.59% and -12.09% respectively from the prior year [3] Analyst Sentiment - Recent shifts in analyst projections for Paccar should be monitored, as positive revisions indicate confidence in the company's performance and profit potential [4] - The Zacks Rank system, which assesses estimate changes, currently ranks Paccar at 5 (Strong Sell), with a 4.27% decrease in the EPS estimate over the last 30 days [6] Valuation Metrics - Paccar is trading with a Forward P/E ratio of 16.05, which is a premium compared to the industry's average Forward P/E of 10.14 [7] - The company has a PEG ratio of 3.39, significantly higher than the industry average PEG ratio of 1.07 [7] Industry Context - The Automotive - Domestic industry, part of the Auto-Tires-Trucks sector, has a Zacks Industry Rank of 218, placing it in the bottom 12% of over 250 industries [8]

Group 1 - Paccar Inc. is a leading producer and distributor of commercial trucks and parts, operating through three reportable segments: Truck, Parts, and Financial Services [1] - The company employs over 30,000 people worldwide and has a significant market presence [1]

Core Viewpoint - Paccar's shares have increased by approximately 4.3% since the last earnings report, but this performance is below that of the S&P 500, raising questions about the sustainability of this trend leading up to the next earnings release [1] Group 1: Earnings Report and Estimates - The consensus estimate for Paccar has decreased by 23.06% over the past month, indicating a downward trend in estimates revisions [2] - The stock has received a Zacks Rank of 5, categorized as a Strong Sell, suggesting expectations of below-average returns in the coming months [4] Group 2: VGM Scores - Paccar currently holds a Growth Score of B, but has a low Momentum Score of D, indicating weaker performance in momentum compared to growth [3] - The stock has a value grade of C, placing it in the middle 20% for this investment strategy, contributing to an overall aggregate VGM Score of B [3]

Company Performance - Paccar (PCAR) closed at $94.05, reflecting a -0.97% change from the previous day, which is less than the S&P 500's daily loss of 0.56% [1] - Over the past month, Paccar's shares have increased by 5.18%, underperforming the Auto-Tires-Trucks sector's gain of 16.76% and the S&P 500's gain of 7.37% [1] Upcoming Earnings - Paccar is expected to report earnings of $1.29 per share, indicating a year-over-year decline of 39.44% [2] - The Zacks Consensus Estimate for revenue is projected at $6.81 billion, down 17.63% from the previous year [2] Annual Forecast - For the entire year, the Zacks Consensus Estimates forecast earnings of $5.70 per share and revenue of $27.88 billion, representing declines of -27.85% and -11.69% respectively compared to the previous year [3] - Recent changes to analyst estimates for Paccar suggest a dynamic business outlook, with positive revisions indicating a potentially favorable business trend [3] Analyst Ratings - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), currently rates Paccar at 5 (Strong Sell) [5] - Over the last 30 days, the Zacks Consensus EPS estimate has decreased by 13.94% [5] Valuation Metrics - Paccar has a Forward P/E ratio of 16.67, which is a premium compared to the industry's average Forward P/E of 10.66 [6] - The company has a PEG ratio of 3.52, while the average PEG ratio for the Automotive - Domestic industry is 1.11 [7] Industry Context - The Automotive - Domestic industry, part of the Auto-Tires-Trucks sector, has a Zacks Industry Rank of 218, placing it in the bottom 12% of over 250 industries [8] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [8]

Core Insights - Harley-Davidson, Inc. reported first-quarter 2025 adjusted earnings of $1.07 per share, exceeding the Zacks Consensus Estimate of 80 cents, but down from $1.72 per share in the same quarter last year [1] - Consolidated revenues for the quarter were $1.33 billion, a decline of 23% year-over-year [1] Segmental Highlights - Revenues from the Motorcycle and Related Products segment fell 27% year-over-year to $1.08 billion, missing the forecast of $1.17 billion due to lower motorcycle shipments [2] - Worldwide motorcycle shipments decreased by 33% to 38,600 units, below the estimate of 43,571 units [2] - Revenues from motorcycle sales were $864 million, down 29% year-over-year, with operating income plunging 51% to $116 million, falling short of the estimate of $165.2 million [2] Retail Performance - Harley-Davidson retailed 31,000 motorcycle units globally, a decline of 21% year-over-year, and below expectations of 38,000 units [3] - Retail motorcycle sales in North America decreased by 24% to 20,900 units, while sales in EMEA declined by 2%, and Asia Pacific and Latin America saw declines of 28% and 6%, respectively [3] Parts and Accessories - Revenues from parts and accessories fell 14% year-over-year to $143 million, missing the estimate of $162.2 million [4] - Revenues from apparel decreased by 11% year-over-year to $57 million, also falling short of the forecast of $63 million [4] Financial Services - Revenues for Harley-Davidson Financial Services totaled $245 million, a decline of 2% year-over-year, missing the forecast of $273 million [5] - Operating income increased by 19% to $64 million, surpassing the estimate of $51.4 million due to lower provisions for credit losses and reduced operating expenses [5] LiveWire Performance - Total shipments for LiveWire were 33 units, a decline of 72% from the previous year, with revenues down 42% to $3 million, missing the estimate of $6.5 million [6] - Operating loss narrowed from $29 million to $20 million, which was better than the projected loss of $29.7 million [6] Financial Position - As of March 31, 2025, Harley-Davidson had cash and cash equivalents of $1.93 billion, up from $1.59 billion at the end of 2024 [7] - Long-term debt increased to $4.96 billion from $4.46 billion as of December 31, 2024 [7] - The company withdrew its 2025 guidance amid macroeconomic uncertainties and tariff issues [7]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) PACCAR reported Q1 2025 net sales and revenues of $7.44 billion and net income of $505.1 million, a significant decrease from Q1 2024, primarily due to lower truck sales and a $350 million pre-tax charge for European civil litigation Q1 2025 vs Q1 2024 Consolidated Statement of Comprehensive Income Highlights | Metric | Q1 2025 (in millions) | Q1 2024 (in millions) | Change | | :--- | :--- | :--- | :--- | | **Net Sales and Revenues** | $6,913.7 | $8,235.0 | -16.0% | | **Total Income Before Income Taxes** | $643.1 | $1,534.5 | -58.1% | | **Net Income** | $505.1 | $1,195.3 | -57.7% | | **Diluted EPS** | $0.96 | $2.27 | -57.7% | Consolidated Balance Sheet Highlights | Metric | March 31, 2025 (in millions) | Dec 31, 2024 (in millions) | | :--- | :--- | :--- | | **Total Assets** | $42,724.7 | $43,418.9 | | Cash and cash equivalents | $5,517.7 | $7,060.8 | | Total Stockholders' Equity | $18,022.1 | $17,506.9 | Q1 2025 vs Q1 2024 Consolidated Statement of Cash Flows Highlights | Metric | Q1 2025 (in millions) | Q1 2024 (in millions) | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $910.3 | $1,469.0 | | Net Cash Used in Investing Activities | ($392.6) | ($526.1) | | Net Cash Used in Financing Activities | ($2,134.7) | ($1,880.0) | | Net Decrease in Cash and Cash Equivalents | ($1,543.1) | ($987.2) | [Note A - Basis of Presentation](index=8&type=section&id=Note%20A%20-%20Basis%20of%20Presentation) The financial statements are prepared under GAAP for interim reporting, with a key development being the formation of a U.S. battery manufacturing joint venture, Amplify Cell Technologies, accounted for using the equity method - PACCAR formed a battery manufacturing joint venture, Amplify Cell Technologies, with a **30% interest**, accounted for using the equity method[22](index=22&type=chunk) - PACCAR contributed **$44.7 million** to the joint venture in Q1 2025, with a maximum required contribution of **$830.0 million**, and the equity method investment was valued at **$237.6 million** as of March 31, 2025[22](index=22&type=chunk) [Note B – Sales and Revenues](index=9&type=section&id=Note%20B%20%E2%80%93%20Sales%20and%20Revenues) This note details the disaggregation of revenues, with Truck sales forming the largest component, followed by Parts sales, and Financial Services revenues primarily from interest income on loans and leases Truck, Parts and Other Revenues by Source (in millions) | Source | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Truck Sales | $4,971.7 | $6,304.7 | | Parts Sales | $1,637.6 | $1,625.6 | | **Total Truck, Parts and Other** | **$6,913.7** | **$8,235.0** | Financial Services Lease Revenues by Type (in millions) | Lease Type | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Finance lease revenues | $88.2 | $82.6 | | Operating lease revenues | $150.8 | $174.9 | | **Total lease revenues** | **$239.0** | **$257.5** | - The company's total commitment to acquire trucks at a guaranteed value for contracts accounted for as a sale was **$572.8 million** at March 31, 2025[31](index=31&type=chunk) [Note E - Finance and Other Receivables](index=13&type=section&id=Note%20E%20-%20Finance%20and%20Other%20Receivables) Total net finance and other receivables increased to $19.61 billion at March 31, 2025, from $19.31 billion at year-end 2024, with the allowance for credit losses stable at $144.6 million Allowance for Credit Losses Activity (in millions) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Balance at January 1 | $145.2 | $133.0 | | Provision for losses | $18.3 | $16.1 | | Charge-offs | ($23.3) | ($10.8) | | Recoveries | $2.3 | $2.2 | | **Balance at March 31** | **$144.6** | **$139.3** | - The balance of repossessed inventory increased to **$107.8 million** at March 31, 2025, from **$80.9 million** at December 31, 2024, primarily due to one large fleet customer in the U.S[78](index=78&type=chunk) [Note F - Product Support Liabilities](index=19&type=section&id=Note%20F%20-%20Product%20Support%20Liabilities) This note covers warranty reserves and deferred revenues from extended service contracts, with warranty reserves increasing slightly to $622.4 million and deferred revenues growing to $1.34 billion in Q1 2025 Changes in Product Support Liabilities (in millions) | Liability Type | Balance at Jan 1, 2025 | Balance at Mar 31, 2025 | Balance at Mar 31, 2024 | | :--- | :--- | :--- | :--- | | Warranty Reserves | $606.1 | $622.4 | $763.4 | | Deferred Revenues on Extended Warranties & R&M | $1,302.2 | $1,343.5 | $1,253.6 | [Note I - Segment Information](index=22&type=section&id=Note%20I%20-%20Segment%20Information) PACCAR operates in three segments: Truck, Parts, and Financial Services, with the Truck segment's income before tax falling sharply and the 'Other' segment reporting a significant loss due to a $350.0 million charge for European civil litigation Segment Income Before Income Taxes (in millions) | Segment | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Truck | $364.9 | $881.6 | | Parts | $426.5 | $455.8 | | Other | ($353.2) | ($2.3) | | **Truck, Parts and Other** | **$438.2** | **$1,335.1** | | Financial Services | $121.1 | $113.9 | - The 'Other' segment includes a **$350.0 million** pre-tax charge related to civil litigation in Europe (EC-related claims) in the first quarter of 2025[94](index=94&type=chunk) [Note M – Commitments and Contingencies](index=30&type=section&id=Note%20M%20%E2%80%93%20Commitments%20and%20Contingencies) This note details ongoing legal proceedings, most notably the EC-related claims, for which the company recorded an additional pre-tax charge of $350.0 million in Q1 2025 due to higher anticipated settlement costs - Due to higher settlement costs for EC-related claims, the Company recorded an additional pre-tax charge of **$350.0 million** (**$264.5 million** after-tax) in Q1 2025[128](index=128&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management attributes the 15% YoY revenue decline to lower truck deliveries and a $350 million pre-tax charge for European litigation, while providing a cautious outlook for 2025 truck sales and planning significant investments in new technologies [Outlook](index=31&type=section&id=Outlook) The company projects lower heavy-duty truck sales for 2025 in key markets, forecasts a 2-4% increase in Parts sales, and plans significant capital and R&D investments focusing on new powertrains, connected services, and a battery joint venture 2025 Truck Industry Sales Outlook | Region | 2025 Projected Sales | 2024 Sales | | :--- | :--- | :--- | | U.S. & Canada (Heavy-duty) | 235,000 - 265,000 units | 268,100 units | | Europe (>16-tonne) | 270,000 - 300,000 units | 316,100 units | | South America (Heavy-duty) | 100,000 - 110,000 units | 119,000 units | - PACCAR Parts sales are expected to increase **2-4%** in 2025 compared to 2024[136](index=136&type=chunk) - Planned 2025 investments include **$700-$800 million** in capital expenditures and **$450-$480 million** in R&D, plus a total project investment of **$600-$900 million** in the Amplify Cell Technologies battery joint venture[139](index=139&type=chunk)[203](index=203&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) The Truck segment's income before tax plummeted 59% YoY due to decreased deliveries and lower price realization, while the Parts segment saw record revenue but a 6% income decline, and Financial Services income grew 6% due to portfolio growth New Truck Deliveries by Region (Units) | Region | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | U.S. and Canada | 22,200 | 29,500 | (25)% | | Europe | 10,400 | 11,600 | (10)% | | Other | 7,500 | 7,000 | 7% | | **Total Units** | **40,100** | **48,100** | **(17)%** | - Truck segment income before tax decreased **59%** to **$364.9 million**, primarily due to lower truck unit deliveries and lower price realization in the U.S., Canada, and Europe[151](index=151&type=chunk)[152](index=152&type=chunk) - Parts segment income before tax decreased **6%** to **$426.5 million**, with gross margin falling to **30.7%** from **32.5%** YoY due to higher material and warehouse costs[160](index=160&type=chunk)[164](index=164&type=chunk) - Financial Services income before tax increased **6%** to **$121.1 million**, driven by higher finance margins from a larger loan and lease portfolio[166](index=166&type=chunk)[170](index=170&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company's cash and marketable securities decreased by $1.5 billion to $8.34 billion, primarily due to $1.75 billion in dividend payments, while cash from operations decreased to $910.3 million, yet strong liquidity is maintained with $4.93 billion in unused credit lines - Total cash and marketable securities stood at **$8.34 billion** at March 31, 2025, a decrease of **$1.50 billion** from December 31, 2024[194](index=194&type=chunk) - Cash provided by operations decreased to **$910.3 million** in Q1 2025 from **$1,469.0 million** in Q1 2024, mainly due to lower net income[195](index=195&type=chunk) - The company paid **$1.75 billion** in dividends during Q1 2025[197](index=197&type=chunk) - As of March 31, 2025, the company had **$4.93 billion** unused out of **$5.52 billion** in total credit line arrangements[199](index=199&type=chunk) [Reconciliation of GAAP to Non-GAAP Financial Measures](index=44&type=section&id=RECONCILIATION%20OF%20GAAP%20TO%20NON-GAAP%20FINANCIAL%20MEASURES) This section reconciles GAAP to non-GAAP measures by adjusting for the $350.0 million pre-tax EC-related claims charge, resulting in an adjusted net income of $769.6 million for Q1 2025 Q1 2025 GAAP to Non-GAAP Reconciliation (in millions, except per share) | Metric | GAAP | Adjustment (EC-related claims) | Non-GAAP | | :--- | :--- | :--- | :--- | | Net Income | $505.1 | $264.5 | $769.6 | | Diluted EPS | $0.96 | $0.50 | $1.46 | | After-tax Return on Revenues | 6.8% | 3.5% | 10.3% | - The adjustment for EC-related claims relates to a pre-tax charge of **$350.0 million** (**$264.5 million** after-tax) recorded in Q1 2025[214](index=214&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company states there were no material changes in its market risk during the first quarter of 2025 and refers to its 2024 Annual Report on Form 10-K for further information - There were no material changes in the Company's market risk during the three months ended March 31, 2025[218](index=218&type=chunk) [Controls and Procedures](index=46&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period, with no material changes to internal controls over financial reporting occurring during the quarter - The Principal Executive Officer and Principal Financial Officer concluded that the Company's disclosure controls and procedures were effective as of March 31, 2025[219](index=219&type=chunk) - No changes in internal controls over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[220](index=220&type=chunk) [PART II. OTHER INFORMATION](index=47&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=47&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section refers to Note M, "Commitments and Contingencies," for information on litigation matters, primarily discussing the EC-related claims and the additional $350 million charge taken in Q1 2025 - Information on legal proceedings is incorporated by reference from Note M – "Commitments and Contingencies"[223](index=223&type=chunk) [Risk Factors](index=47&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company states there have been no material changes to its risk factors during the first quarter of 2025 and refers to the 2024 Annual Report on Form 10-K for a full description - There have been no material changes in the Company's risk factors during the three months ended March 31, 2025[224](index=224&type=chunk) [Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=47&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES,%20USE%20OF%20PROCEEDS,%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company reported no unregistered sales of equity securities and no share repurchases during Q1 2025 under its $500 million plan, with $110.0 million repurchased to date - No repurchases were made under the company's stock repurchase plan during the first three months of 2025[226](index=226&type=chunk) - As of March 31, 2025, the Company has repurchased a cumulative **$110.0 million** of shares under its **$500.0 million** authorization from 2018[226](index=226&type=chunk)