Moody's Upgrades PACCAR - Analyst Blog
October 18 2011 - 12:44PM
Zacks
Moody’s Investors Service, the credit rating agency of
Moody's Corporation (MCO), has upgraded the
investment grade credit rating of PACCAR Inc.
(PCAR) from “Negative” to “Stable” as it expects the company to
benefit from strong demand for heavy trucks in 2012.
The rating agency also affirmed short-term rating as Prime-1 and
long-term rating as A1 for the company and its financial service
subsidiaries.
The ratings will positively affect the company's debt-raising
capacity.
PACCAR is
the third largest manufacturer of heavy-duty trucks (with a
capacity of more than 15 metric tons) in the world after
Volvo
(VOLVY) and
Daimler
(DDAIF), and has substantial
manufacturing exposure to light/medium trucks (with a capacity of
6–15 metric tons).
PACCAR’s
market share has been robust, especially with its DAF nameplate. In
the first half of 2011, the company’s DAF nameplate achieved a
market share of 15.3% in the above 15-tonne market.
The Zacks #3
Ranked (Hold) company reported a profit of $239.7 million or 65
cents per share in the second quarter of the year that more than
doubled from $99.6 million or 27 cents per share in the prior-year
quarter. However, the truck maker’s profit missed the Zacks
Consensus Estimate of 68 cents per share.
The
improvement in profit reflected strong truck sales in North America
and Europe and better aftermarket parts sales and financial
services results worldwide. However, the company’s suppliers faced
difficulty while catering to the robust increase in truck build
rates.
PACCAR
expects industry sales in the above 15-ton truck market in Europe
in the range of 230,000-250,000 units for 2011. The company
anticipates industry retail sales in the Class 8 truck markets of
U.S. and Canada in the range of 180,000-200,000 vehicles in the
year.
The company
has targeted capital investments of $400-$500 million and R&D
expenses of $275-$300 million for 2011 in order to develop new
products and enhance manufacturing operating efficiency.
DAIMLER AG (DDAIF): Free Stock Analysis Report
MOODYS CORP (MCO): Free Stock Analysis Report
PACCAR INC (PCAR): Free Stock Analysis Report
VOLVO AB ADR B (VOLVY): Free Stock Analysis Report
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