Last update on 2024-06-07

PACCAR (PCAR) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Discover PACCAR (PCAR)'s Piotroski F-Score analysis for 2023. Final score: 6/9, highlighting profitability, liquidity trends, and key financial performance.

Short Analysis - Piotroski Score: 6

We're running PACCAR (PCAR) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score helps investors find financially strong and undervalued stocks by evaluating profitability, liquidity, and efficiency. PACCAR (PCAR) scores a 6 out of 9, suggesting good financial health. Notably, PACCAR demonstrates solid profitability with a positive net income of $4.6 billion in 2023 and positive cash flow from operations at $4.19 billion. The Return on Assets (ROA) increased by 29.52%, and the leverage ratio dropped by nearly 10%, indicating financial stability. However, operating cash flow was lower than net income and the current ratio slightly decreased. The number of shares also slightly increased, which doesn't attract any points.

Insights for Value Investors Seeking Stable Income

Based on the analysis, PACCAR (PCAR) appears to be a strong company with positive financial health as reflected by the Piotroski F-Score of 6. This makes it a potential investment candidate. However, investors should also consider areas where the company didn't score, like the slight dilution of shares and the current ratio's decline. Overall, PACCAR is worth further consideration due to its favorable profitability, efficient resource utilization, and reduced leverage.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of PACCAR (PCAR)

Company has a positive net income?

Check if the net income is positive or negative. Adding a point if it is positive is crucial because it provides essential information about the company's profitability.

For 2023, PACCAR (PCAR) reported a net income of $4,600,800,000, marking a significant achievement. Comparing this to the previous two decades, where fluctuations were evident due to various market conditions, including a record net income dip in 2009 at $111,900,000, this year's net income indicates strong company performance. The consistency of positive annual net incomes over the past 20 years, especially the substantial increase from $3,011,600,000 in 2022 to $4,600,800,000 in 2023, underscores robust financial health. Thus, this trend is highly favorable, adding 1 point to the Piotroski score for PACCAR.

Company has a positive cash flow?

The Piotroski criterion examines if a company’s Cash Flow from Operations (CFO) is positive, signaling good financial health.

For PACCAR (PCAR), the Cash Flow from Operations (CFO) for 2023 is $4,190,000,000, which is significantly positive. Historically, the company has demonstrated a consistent pattern of positive CFO, as seen in the last 20 years' data. For instance, the CFO ranged from $818,700,000 in 2003 to $3,027,000,000 in 2022. The substantial increase to $4,190,000,000 in 2023 marks a notable upward trend and indicates robust cash generation capability, signaling strong financial health and operational efficiency. Hence, in the Piotroski Analysis, this criterion scores 1 point, a positive indication.

Return on Assets (ROA) are growing?

The change in Return on Assets (ROA) year-over-year signifies the efficiency with which a company is using its assets to generate earnings. A positive change is an indicator of improving efficiency and profitability.

Comparing the ROA of 0.1242 in 2023 to the ROA of 0.0959 in 2022, it's apparent that PACCAR's ROA increased. This increment of approximately 29.52% (from 0.0959 to 0.1242) demonstrates an improved efficiency in asset utilization, which is favorable for the company. Over the last 20 years, PACCAR's ROA has shown fluctuations; although currently it is still lower compared to the industry median ROA of 0.2546 in 2023, the upward trend for PACCAR is promising. This positive change means adding 1 point in the Piotroski analysis.

Operating Cashflow are higher than Netincome?

This criterion helps in assessing the quality of the company's earnings by comparing cash flow from operations with net income.

In 2023, PACCAR’s operating cash flow stood at $4.19 billion, while its net income was higher at $4.60 billion. This observation indicates that operating cash flow is lower than net income for the year, thus earning a score of 0 for this specific criterion. It implies that a portion of the reported earnings might involve non-cash items or be subject to accrual accounting methods. Over the past 20 years, PACCAR’s operating cash flow has seen significant growth, from $818.7 million in 2003 to $4.19 billion in 2023. Similarly, net income has also grown, from $526.5 million in 2003 to $4.60 billion in 2023. During this period, accruals have varied, indicating fluctuations in how earnings are being managed. Historically, the operating cash flow has mostly grown in tandem with net income, highlighting operational robustness in many years, although some divergence between the two metrics in certain years suggests the need for a more granular analysis of the accounting treatments applied.

Liquidity of PACCAR (PCAR)

Leverage is declining?

Change in Leverage evaluates whether a company’s financial leverage decreased compared to the previous year. Lower leverage can be seen as positive as it indicates reduced financial risk.

In 2023, PACCAR’s leverage ratio decreased from 0.2529 in 2022 to 0.228. This corresponds to a reduction of approximately 9.87%. Lower leverage indicates that PACCAR has reduced its reliance on debt to finance its operations, likely positioning the company in a more financially stable situation to weather economic fluctuations. This trend is positive, adding 1 point to PACCAR's Piotroski score for this criterion.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay short-term obligations with its short-term assets. It is important because it gauges liquidity and financial health.

In 2023, PACCAR's Current Ratio is 2.5, a slight decrease from 2.5993 in 2022. This decrease indicates a marginally reduced ability to meet short-term liabilities with short-term assets. Over the last 20 years, PACCAR's Current Ratio fluctuated significantly, peaking at 4.61 in 2005 and hitting a low of 1.27 in 2019. However, it has consistently outperformed the industry's median ratio, which was 1.7543 in 2023. Despite the drop in the Current Ratio, PACCAR maintains a strong liquidity position compared to its industry peers. Therefore, no point is added.

Number of shares not diluted?

Change in Shares Outstanding indicates the change in the number of shares issued and held by shareholders. For PACCAR (PCAR), it's crucial to monitor this as it impacts ownership distribution, earnings per share (EPS), and shareholder value. A decrease typically suggests share buybacks, which can boost EPS and signify strong financial health.

Comparing the Outstanding Shares between 2022 (522,600,000 shares) and 2023 (523,900,000 shares), the shares have increased. No point is added for this criterion. Historically, analyzing data for the past 20 years shows varied trends in outstanding shares, including significant rises in 2018 and 2019, implying share issuance or other corporate actions. The slight increase in 2023 could be detrimental if shareholders perceive this as dilutive, impacting their ownership percentage and potentially leading to a lower EPS.

Operating of PACCAR (PCAR)

Cross Margin is growing?

The criterion compares the current Gross Margin with the previous year to assess profitability growth. A higher Gross Margin signifies better cost control relative to revenue.

PACCAR's Gross Margin rose from 0.1814 in 2022 to 0.2172 in 2023, demonstrating an increase. This improvement in Gross Margin, with an added point according to the Piotroski scale, indicates better cost management and enhanced profitability. Over the last 20 years, PACCAR's Gross Margin has shown fluctuations but remained mostly below the industry median. The recent increase could be seen as a positive trend, bringing the Gross Margin closer to or exceeding the industry median of 0.2546 in 2023.

Asset Turnover Ratio is growing?

Asset turnover measures a company's efficiency in using its assets to generate sales. It is essential because higher ratios often indicate better performance.

For PACCAR (PCAR), the asset turnover ratio has increased from 0.918 in 2022 to 0.9481 in 2023. This increment suggests better utilization of assets to generate revenue. Historically, PACCAR has fluctuated in asset turnover, peaking at 1.1035 in 2006 and dipping to 0.4922 in 2009. Given this 2023 increase, PACCAR deserves 1 point for improved efficiency in resource utilization. However, it's crucial to monitor sustainability.