NEW YORK (TheStreet) -- Shares of Paccar (PCAR) are gaining by 0.68% to $63.99 after analysts at BMO Capital Markets upgraded the company to "market perform" from "underperform" and maintained their $60 price target. Paccar is a manufacturer of medium and heavy-duty trucks.
"We are raising our rating following numerous recent checks into the commercial truck market including a trip last week to PACCAR's engine facility in Columbus, Mississippi," analysts said.
Key highlights include their expectation that any potential downturn in the North American class 8 truck market over the next year to year and a half is relatively modest versus prior cycles while the European market appears set for a long-waited recovery, according to the analyst note.
Analysts are also attracted to the company's pristine balance sheet, with a substantial cash position and excellent management track record.
Separately, 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, impressive record of earnings per share growth, compelling growth in net income, reasonable valuation levels and good cash flow from operations. We feel its strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 11.3%. Since the same quarter one year prior, revenues rose by 10.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- PACCAR INC has improved earnings per share by 37.7% 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 two years. We feel that this trend should continue. During the past fiscal year, PACCAR INC increased its bottom line by earning $3.82 versus $3.30 in the prior year. This year, the market expects an improvement in earnings ($4.53 versus $3.82).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 38.1% when compared to the same quarter one year prior, rising from $273.90 million to $378.40 million.
- Net operating cash flow has significantly increased by 66.67% to $476.20 million when compared to the same quarter last year. In addition, PACCAR INC has also vastly surpassed the industry average cash flow growth rate of -21.12%.
- You can view the full analysis from the report here: PCAR Ratings Report