DCF Studio

    PCAR · NMS · Industrials

    PACCAR Inc

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 52.07

    Market price

    USD 116.06

    Implied upside

    -55.1%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedCapital expenditure runs at 4.6% of revenue against depreciation of 2.8%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD 52.07-55.1%
    Exit multiple
    USD 110.30-5.0%
    Market price
    USD 116.06

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn3bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 28.3bnUSD 28.2bnUSD 28.1bnUSD 28.0bnUSD 27.8bn-0.4%
    EBITUSD 3.9bnUSD 3.9bnUSD 3.8bnUSD 3.8bnUSD 3.8bn-0.4%
    NOPATUSD 3.1bnUSD 3.0bnUSD 3.0bnUSD 3.0bnUSD 3.0bn-0.4%
    Add depreciation & amortisationUSD 779.1mUSD 775.8mUSD 772.4mUSD 769.0mUSD 765.7m-0.4%
    Less capital expenditureUSD -1.3bnUSD -1.3bnUSD -1.3bnUSD -1.3bnUSD -1.3bn-0.4%
    Less increase in working capitalUSD 17.1mUSD 17.0mUSD 16.9mUSD 16.8mUSD 16.8m+0.4%
    Free cashflow to firmUSD 2.5bnUSD 2.5bnUSD 2.5bnUSD 2.5bnUSD 2.5bn-0.4%
    Discount factor0.95610.87390.79880.73010.6674-
    Present valueUSD 2.4bnUSD 2.2bnUSD 2.0bnUSD 1.8bnUSD 1.7bn-9.0%
    Present Value Of The ForecastUSD 10.2bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.981Reported 0.972, pulled toward 1.0 (Blume)
    Cost of equity10.39%Risk-free + beta x equity risk premium
    Cost of debt7.00%Assumed: risk-free + 2bp (interest expense not reported)
    Market capitalisationUSD 61.1bn79.6% of capital
    Total debtUSD 15.6bn20.4% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC9.40%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 52.07

    70% of EV

    Forecast FCFF, final year
    USD 2.5bn
    Capex at depreciation, working capital in reinvestment
    USD 3.0bn
    Less reinvestment at g/ROIC (21.4% of NOPAT)
    USD -642.6m
    Capitalised
    USD 2.4bn
    ROIC (reported)
    11.7%
    Terminal value, undiscounted
    USD 35.1bn
    Terminal value, discounted
    USD 23.4bn
    Enterprise value
    USD 33.6bn
    Less net debt
    USD 6.1bn
    Equity value
    USD 27.4bn

    Exit at 17.7x EBITDA

    Value per shareUSD 110.30

    84% of EV

    Terminal value, undiscounted
    USD 81.0bn
    Terminal value, discounted
    USD 54.1bn
    Enterprise value
    USD 64.2bn
    Less net debt
    USD 6.1bn
    Equity value
    USD 58.1bn

    Spread between methods: 72%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.40%70.4773.2076.4580.3985.30
    8.40%58.9060.4462.2064.2666.71
    9.40%50.2651.1252.0753.1654.39
    10.40%43.5644.0144.5045.0345.62
    11.40%38.2138.4138.6238.8339.05

    Outlined: this model. Green text: above today's price of 116.06. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year-0.4%17.9%+18.3pp
    EBIT margin13.7%26.6%+12.9pp
    Discount rate9.4%5.8%-3.6pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.