How Will PACCAR (PCAR) Stock Respond To Volkswagen (VLKAY) Takeover Talk?

NEW YORK (TheStreet) -- Shares of PACCAR Inc.  (PCAR) are up 0.97% to $64.40 in pre-market trade as Volkswagen (VLKAY) prepares a takeover bid for the U.S. truck maker next year, Daimler (DDAIF) Trucks Chief Wolfgang Bernhard told analysts at Bernstein Research, Reuters reports.

According to a Bernstein Research note published today, Bernhard insisted that "serious, multiple sources" informed him that VW was going to bid for Paccar next year.

Volkswagen said it isn't interested in bidding for PACCAR, rejecting comments made by Bernhard, according to Bloomberg..

Daimler declined to comment. Paccar was unavailable for comment.

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TheStreet Ratings team rates PACCAR INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate PACCAR INC (PCAR) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year, growth in earnings per share, reasonable valuation levels and compelling growth in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 6.5%. Since the same quarter one year prior, revenues rose by 11.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • PACCAR INC has improved earnings per share by 14.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, PACCAR INC increased its bottom line by earning $3.30 versus $3.12 in the prior year. This year, the market expects an improvement in earnings ($3.62 versus $3.30).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Machinery industry and the overall market on the basis of return on equity, PACCAR INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • You can view the full analysis from the report here: PCAR Ratings Report

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