Abstract

PACCAR Inc will report its quarter ended December 2025 results on January 27, 2026 Pre-Market. Consensus compiled from available estimates points to lower revenue and earnings as pricing normalizes and heavy-duty truck demand cools from prior peaks, with investors focused on margins, order trends, and mix into 2026.

Market Forecast

For the quarter ending December 2025, the current-quarter forecast indicates revenue of $6.26 billion, an estimated year-over-year decline of 17.91%, EBIT of $0.54 billion with an estimated year-over-year decline of 47.48%, and EPS of $1.06 with an estimated year-over-year decline of 37.36. Street expectations imply pressure on gross profit margin and net profit margin versus last year as pricing and mix revert toward historical levels; adjusted EPS is expected to fall accordingly. The main business outlook emphasizes continued deliveries across Trucks, Parts, and Financial Services with production disciplined against industry demand. The most promising segment remains Parts, supported by an expanding installed base and aftermarket penetration; parts revenue is positioned to hold up better than Trucks on a year-over-year basis due to maintenance needs across fleets.

Last Quarter Review

In the quarter ended September 2025, PACCAR Inc delivered revenue of $6.67 billion, a gross profit margin of 13.30%, GAAP net profit attributable to the parent company of $0.59 billion, a net profit margin of 8.84%, and adjusted EPS of $1.12, with revenue down 13.40% year over year and EPS down 39.46% year over year. A notable highlight was resilient profitability despite a sequential decline in net income of 18.49%, reflecting disciplined production and cost control as market volumes eased. Main business performance showed Trucks at $4.38 billion, Parts at $1.72 billion, and Financial Services at $0.57 billion; Parts maintained a steadier trajectory as fleets prioritized maintenance, while Trucks moderated from prior cycle highs.

Current Quarter Outlook

Core Truck Operations

Truck revenue is projected to decrease year over year as North American Class 8 production rationalizes and European demand normalizes, following two exceptional years of replacement-driven orders. Into the December quarter, investor attention will center on price realization versus cost inputs, particularly steel and components, as pricing negotiated during the peak is repriced on new orders. Margins are likely to compress from the elevated levels of the last cycle due to less favorable mix and lower utilization despite continued manufacturing discipline. The key swing factors for the stock this quarter are the net pricing cadence on new builds, order intake for the next two quarters, and any commentary on lead times and backlog conversion. If PACCAR Inc demonstrates stable order intake into early 2026 and preserves pricing via value-added features and service bundles, downside to gross margin could be cushioned; conversely, a weaker intake or heavier discounting would weigh on profitability and sentiment.

Aftermarket Parts

Parts remains the relative outperformer under a moderating delivery cycle, supported by the expanded population of late-model PACCAR Inc trucks and higher attach rates for proprietary components. Recurring maintenance and uptime services should sustain demand, with availability improvements and distribution network efficiencies aiding revenue stability. While year-over-year comparisons tighten against last year’s strong base, the segment typically exhibits less cyclicality than new truck sales and offers higher margins, which provides an offset to the pressure in Trucks. Any incremental disclosure on digital platforms, inventory availability, and dealer throughput will be read as signals for durability of Parts growth and gross margin resilience. Management’s commentary on international parts trends and cross-border logistics costs will also be important for gauging regional breadth.

Financial Services

Financial Services is sensitive to used truck values and credit provisioning. As the cycle cools, used equipment pricing and lease residuals can compress, prompting conservative provisioning that weighs on EBIT, although the overall portfolio quality remains a focus. Funding costs are elevated versus the prior year, but the yield on earning assets has also repriced higher; net interest spreads and credit loss trends will be closely watched for signs of stabilization. A balanced outcome—modest spread compression yet stable delinquencies—would likely be acceptable to the market, while any deterioration in credit losses or accelerated residual value markdowns would be a negative surprise.

Pricing, Mix, and Cost Trajectory

Into the December 2025 quarter, the central debate is how much of the prior cycle’s price increases can be sustained against lower volumes. Supplier cost normalization offers some relief, but lower absorption and less premium mix (fewer high-spec tractors) could offset benefits. PACCAR Inc has historically leveraged modular platforms and disciplined capex to defend margins; investors will look for evidence that the company can maintain double-digit gross margins as revenue declines. Management color on backlog quality, cancellations, and lead times will materially shape the gross margin trajectory in 2026.

Order Intake and Backlog Visibility

Orders and backlog commentary will anchor the stock’s near-term path. The market is prepared for a sequential slowdown in orders as fleets evaluate capacity utilization and freight rates. Signals of stabilization in late 2026 deliveries, or indications that vocational and specialty orders remain healthy, would be constructive. Conversely, a sharper than anticipated falloff in long-haul tractors or softening in Europe could extend the downcycle and raise the risk of incremental price competition.

Cash Generation and Capital Allocation

PACCAR Inc’s cash generation through the cycle is a key support for equity valuation. Even with lower earnings, working-capital release from reduced production can aid free cash flow, which could fund steady dividends and selective buybacks. Investors will focus on how management balances sustaining investments in technology, electrified platforms, and digital services against preserving balance-sheet strength. Any update on capital returns alongside visibility into 2026 investment priorities will influence sentiment.

Analyst Opinions

Recent previews from sell-side institutions indicate a neutral-to-cautious skew, with a majority emphasizing downside risk to revenue and EPS versus last year and heightened sensitivity to order trends and used equipment pricing. Analysts expect lower year-over-year revenue and EPS, citing normalization from peak pricing and softer production schedules; several highlight that Parts can partially offset the cyclical pressure in Trucks, helping margins to hold above prior mid-cycle averages. Commentary also notes that valuation already discounts a portion of the downcycle, placing emphasis on whether PACCAR Inc can defend double-digit gross margins and maintain stable credit metrics in Financial Services. Among well-followed institutions, the prevailing stance maintains Hold/Neutral ratings, waiting for clearer evidence of order stabilization and pricing durability before shifting more decisively bullish.