PACCAR (PCAR): Valuation in Focus as New Truck Tariffs Reshape Competitive Landscape

The U.S. government’s move to introduce a 25% tariff on imported heavy-duty trucks is drawing investor attention to PACCAR (PCAR). This policy shift may provide a competitive boost for its Peterbilt and Kenworth brands.

See our latest analysis for PACCAR.

PACCAR’s share price saw a notable jump on the tariff announcement, with investors betting that domestic manufacturers will enjoy a clearer path as foreign competition faces new headwinds. This shift comes after steady long-term growth: PACCAR’s 1-year total shareholder return sits just above flat, while its 3-year and 5-year total shareholder returns of 88% and 98% respectively highlight resilience and value creation for patient investors. Recent insider selling attracted attention but, for now, momentum appears supported by optimism around the industry backdrop and upcoming shifts in trucking demand.

If this policy shift has you thinking about what else might benefit, now’s a great time to discover See the full list for free.

But with PACCAR’s strong run and the stock now trading near analysts’ price targets, investors have to ask whether today’s optimism leaves room for further gains or if the market has already priced in future growth.

Most Popular Narrative: 4.3% Undervalued

PACCAR’s fair value, according to the most widely followed narrative, is modestly above the recent close price. This suggests measured but real upside exists if the scenario plays out as forecast. This narrative pegs the fair value at $103.5, while the stock last closed at $99.08. This points to a market hovering just below consensus expectations, anchored by optimistic projections for profitability and stability.

*Expansion of the PACCAR Parts business, demonstrated by record revenues even in a flat market and supported by investments in distribution capacity, is driving recurring, higher-margin revenue streams. This should enhance overall net margin and earnings stability.*

Read the complete narrative.

Think the story is all about new truck sales? Not quite. The calculation for this fair value relies on a formula where margin expansion moves the needle, betting big on profitability levers far beyond hardware. Want the detailed playbook behind the number? Unpack the surprise factors shaping these bullish forecasts and the assumption that could make or break this outlook.

Result: Fair Value of $103.5 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent trade friction and weaker truck orders could quickly challenge the bullish case. This leaves room for the narrative to shift in unexpected ways.

Find out about the key risks to this PACCAR narrative.

Another View: Our DCF Model Points to Overvaluation

While the analyst consensus suggests PACCAR is modestly undervalued, our SWS DCF model tells a different story. According to this method, the stock trades above its estimated fair value, which may signal potential overvaluation if long-term cash flows do not meet bullish forecasts. Can the company’s fundamentals deliver enough to justify today’s price?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out PACCAR for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own PACCAR Narrative

If you want to take a different angle or dig into PACCAR’s numbers yourself, you can build a custom narrative in just a few minutes. Do it your way

A great starting point for your PACCAR research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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