Intrinsic value of PACCAR Inc. - PCAR

Previous Close

$67.56

  Intrinsic Value

$194.27

stock screener

  Rating & Target

str. buy

+188%

Previous close

$67.56

 
Intrinsic value

$194.27

 
Up/down potential

+188%

 
Rating

str. buy

We calculate the intrinsic value of PCAR stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 23.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  15.10
  14.09
  13.18
  12.36
  11.63
  10.96
  10.37
  9.83
  9.35
  8.91
  8.52
  8.17
  7.85
  7.57
  7.31
  7.08
  6.87
  6.68
  6.52
  6.36
  6.23
  6.11
  5.99
  5.90
  5.81
  5.73
  5.65
  5.59
  5.53
  5.48
Revenue, $m
  27,044
  30,854
  34,921
  39,239
  43,801
  48,603
  53,642
  58,915
  64,423
  70,165
  76,144
  82,364
  88,832
  95,554
  102,540
  109,799
  117,344
  125,188
  133,345
  141,831
  150,664
  159,863
  169,446
  179,435
  189,852
  200,722
  212,067
  223,916
  236,296
  249,235
Variable operating expenses, $m
  22,798
  26,010
  29,439
  33,078
  36,924
  40,972
  45,220
  49,666
  54,308
  59,149
  64,189
  69,433
  74,885
  80,552
  86,441
  92,561
  98,921
  105,533
  112,410
  119,564
  127,010
  134,764
  142,843
  151,264
  160,046
  169,208
  178,773
  188,761
  199,197
  210,105
Fixed operating expenses, $m
  851
  870
  889
  909
  929
  949
  970
  991
  1,013
  1,036
  1,058
  1,082
  1,105
  1,130
  1,155
  1,180
  1,206
  1,232
  1,260
  1,287
  1,316
  1,345
  1,374
  1,404
  1,435
  1,467
  1,499
  1,532
  1,566
  1,600
Total operating expenses, $m
  23,649
  26,880
  30,328
  33,987
  37,853
  41,921
  46,190
  50,657
  55,321
  60,185
  65,247
  70,515
  75,990
  81,682
  87,596
  93,741
  100,127
  106,765
  113,670
  120,851
  128,326
  136,109
  144,217
  152,668
  161,481
  170,675
  180,272
  190,293
  200,763
  211,705
Operating income, $m
  3,395
  3,974
  4,593
  5,252
  5,948
  6,681
  7,452
  8,258
  9,101
  9,980
  10,896
  11,850
  12,841
  13,872
  14,944
  16,058
  17,217
  18,422
  19,676
  20,980
  22,339
  23,754
  25,229
  26,767
  28,372
  30,046
  31,796
  33,623
  35,533
  37,530
EBITDA, $m
  4,616
  5,368
  6,171
  7,024
  7,926
  8,877
  9,875
  10,919
  12,011
  13,149
  14,335
  15,570
  16,853
  18,188
  19,576
  21,018
  22,517
  24,076
  25,698
  27,386
  29,144
  30,974
  32,882
  34,871
  36,947
  39,112
  41,374
  43,736
  46,205
  48,787
Interest expense (income), $m
  108
  537
  675
  823
  980
  1,148
  1,325
  1,511
  1,707
  1,912
  2,125
  2,348
  2,580
  2,822
  3,073
  3,333
  3,605
  3,886
  4,179
  4,483
  4,800
  5,129
  5,472
  5,829
  6,201
  6,589
  6,993
  7,415
  7,855
  8,315
  8,795
Earnings before tax, $m
  2,857
  3,299
  3,771
  4,271
  4,800
  5,356
  5,940
  6,551
  7,189
  7,855
  8,548
  9,269
  10,020
  10,800
  11,611
  12,454
  13,331
  14,243
  15,192
  16,180
  17,209
  18,282
  19,400
  20,566
  21,783
  23,054
  24,381
  25,768
  27,218
  28,734
Tax expense, $m
  771
  891
  1,018
  1,153
  1,296
  1,446
  1,604
  1,769
  1,941
  2,121
  2,308
  2,503
  2,705
  2,916
  3,135
  3,363
  3,599
  3,846
  4,102
  4,369
  4,647
  4,936
  5,238
  5,553
  5,881
  6,224
  6,583
  6,957
  7,349
  7,758
Net income, $m
  2,086
  2,408
  2,753
  3,118
  3,504
  3,910
  4,336
  4,782
  5,248
  5,734
  6,240
  6,767
  7,314
  7,884
  8,476
  9,091
  9,731
  10,397
  11,090
  11,812
  12,563
  13,346
  14,162
  15,013
  15,902
  16,829
  17,798
  18,810
  19,869
  20,976

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  28,497
  32,513
  36,798
  41,347
  46,155
  51,215
  56,525
  62,082
  67,885
  73,935
  80,236
  86,791
  93,606
  100,689
  108,050
  115,700
  123,650
  131,915
  140,511
  149,453
  158,761
  168,454
  178,552
  189,078
  200,055
  211,508
  223,464
  235,950
  248,994
  262,629
Adjusted assets (=assets-cash), $m
  28,497
  32,513
  36,798
  41,347
  46,155
  51,215
  56,525
  62,082
  67,885
  73,935
  80,236
  86,791
  93,606
  100,689
  108,050
  115,700
  123,650
  131,915
  140,511
  149,453
  158,761
  168,454
  178,552
  189,078
  200,055
  211,508
  223,464
  235,950
  248,994
  262,629
Revenue / Adjusted assets
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
Average production assets, $m
  7,329
  8,362
  9,464
  10,634
  11,870
  13,171
  14,537
  15,966
  17,459
  19,015
  20,635
  22,321
  24,073
  25,895
  27,788
  29,756
  31,800
  33,926
  36,136
  38,436
  40,830
  43,323
  45,920
  48,627
  51,450
  54,396
  57,470
  60,681
  64,036
  67,543
Working capital, $m
  -1,163
  -1,327
  -1,502
  -1,687
  -1,883
  -2,090
  -2,307
  -2,533
  -2,770
  -3,017
  -3,274
  -3,542
  -3,820
  -4,109
  -4,409
  -4,721
  -5,046
  -5,383
  -5,734
  -6,099
  -6,479
  -6,874
  -7,286
  -7,716
  -8,164
  -8,631
  -9,119
  -9,628
  -10,161
  -10,717
Total debt, $m
  12,496
  15,235
  18,157
  21,260
  24,538
  27,990
  31,611
  35,401
  39,358
  43,485
  47,782
  52,252
  56,900
  61,731
  66,751
  71,968
  77,390
  83,027
  88,889
  94,988
  101,336
  107,947
  114,833
  122,012
  129,499
  137,310
  145,464
  153,979
  162,875
  172,174
Total liabilities, $m
  19,435
  22,174
  25,096
  28,199
  31,477
  34,929
  38,550
  42,340
  46,297
  50,424
  54,721
  59,191
  63,839
  68,670
  73,690
  78,907
  84,329
  89,966
  95,828
  101,927
  108,275
  114,886
  121,772
  128,951
  136,438
  144,249
  152,403
  160,918
  169,814
  179,113
Total equity, $m
  9,062
  10,339
  11,702
  13,148
  14,677
  16,286
  17,975
  19,742
  21,587
  23,511
  25,515
  27,599
  29,767
  32,019
  34,360
  36,792
  39,321
  41,949
  44,682
  47,526
  50,486
  53,568
  56,780
  60,127
  63,618
  67,260
  71,062
  75,032
  79,180
  83,516
Total liabilities and equity, $m
  28,497
  32,513
  36,798
  41,347
  46,154
  51,215
  56,525
  62,082
  67,884
  73,935
  80,236
  86,790
  93,606
  100,689
  108,050
  115,699
  123,650
  131,915
  140,510
  149,453
  158,761
  168,454
  178,552
  189,078
  200,056
  211,509
  223,465
  235,950
  248,994
  262,629
Debt-to-equity ratio
  1.380
  1.470
  1.550
  1.620
  1.670
  1.720
  1.760
  1.790
  1.820
  1.850
  1.870
  1.890
  1.910
  1.930
  1.940
  1.960
  1.970
  1.980
  1.990
  2.000
  2.010
  2.020
  2.020
  2.030
  2.040
  2.040
  2.050
  2.050
  2.060
  2.060
Adjusted equity ratio
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,086
  2,408
  2,753
  3,118
  3,504
  3,910
  4,336
  4,782
  5,248
  5,734
  6,240
  6,767
  7,314
  7,884
  8,476
  9,091
  9,731
  10,397
  11,090
  11,812
  12,563
  13,346
  14,162
  15,013
  15,902
  16,829
  17,798
  18,810
  19,869
  20,976
Depreciation, amort., depletion, $m
  1,221
  1,394
  1,577
  1,772
  1,978
  2,195
  2,423
  2,661
  2,910
  3,169
  3,439
  3,720
  4,012
  4,316
  4,631
  4,959
  5,300
  5,654
  6,023
  6,406
  6,805
  7,220
  7,653
  8,104
  8,575
  9,066
  9,578
  10,114
  10,673
  11,257
Funds from operations, $m
  3,307
  3,802
  4,330
  4,890
  5,482
  6,105
  6,759
  7,443
  8,158
  8,903
  9,679
  10,487
  11,327
  12,200
  13,107
  14,051
  15,032
  16,052
  17,113
  18,218
  19,368
  20,566
  21,815
  23,118
  24,477
  25,895
  27,376
  28,924
  30,542
  32,233
Change in working capital, $m
  -153
  -164
  -175
  -186
  -196
  -206
  -217
  -227
  -237
  -247
  -257
  -267
  -278
  -289
  -300
  -312
  -324
  -337
  -351
  -365
  -380
  -396
  -412
  -430
  -448
  -467
  -488
  -510
  -532
  -556
Cash from operations, $m
  3,460
  3,966
  4,505
  5,076
  5,678
  6,312
  6,976
  7,670
  8,395
  9,150
  9,936
  10,754
  11,605
  12,489
  13,408
  14,363
  15,356
  16,389
  17,464
  18,583
  19,748
  20,962
  22,227
  23,547
  24,924
  26,362
  27,864
  29,434
  31,074
  32,790
Maintenance CAPEX, $m
  -1,061
  -1,221
  -1,394
  -1,577
  -1,772
  -1,978
  -2,195
  -2,423
  -2,661
  -2,910
  -3,169
  -3,439
  -3,720
  -4,012
  -4,316
  -4,631
  -4,959
  -5,300
  -5,654
  -6,023
  -6,406
  -6,805
  -7,220
  -7,653
  -8,104
  -8,575
  -9,066
  -9,578
  -10,114
  -10,673
New CAPEX, $m
  -964
  -1,033
  -1,102
  -1,170
  -1,236
  -1,301
  -1,366
  -1,429
  -1,492
  -1,556
  -1,620
  -1,686
  -1,753
  -1,822
  -1,893
  -1,967
  -2,045
  -2,126
  -2,211
  -2,300
  -2,394
  -2,493
  -2,597
  -2,707
  -2,823
  -2,946
  -3,075
  -3,211
  -3,355
  -3,506
Cash from investing activities, $m
  -2,025
  -2,254
  -2,496
  -2,747
  -3,008
  -3,279
  -3,561
  -3,852
  -4,153
  -4,466
  -4,789
  -5,125
  -5,473
  -5,834
  -6,209
  -6,598
  -7,004
  -7,426
  -7,865
  -8,323
  -8,800
  -9,298
  -9,817
  -10,360
  -10,927
  -11,521
  -12,141
  -12,789
  -13,469
  -14,179
Free cash flow, $m
  1,435
  1,712
  2,009
  2,329
  2,670
  3,032
  3,415
  3,818
  4,241
  4,684
  5,147
  5,629
  6,132
  6,655
  7,199
  7,764
  8,352
  8,963
  9,599
  10,260
  10,948
  11,664
  12,410
  13,187
  13,997
  14,842
  15,724
  16,644
  17,606
  18,610
Issuance/(repayment) of debt, $m
  2,546
  2,738
  2,923
  3,103
  3,279
  3,451
  3,621
  3,790
  3,958
  4,126
  4,297
  4,470
  4,648
  4,831
  5,020
  5,217
  5,422
  5,637
  5,862
  6,099
  6,348
  6,610
  6,887
  7,179
  7,486
  7,811
  8,154
  8,515
  8,896
  9,299
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  2,546
  2,738
  2,923
  3,103
  3,279
  3,451
  3,621
  3,790
  3,958
  4,126
  4,297
  4,470
  4,648
  4,831
  5,020
  5,217
  5,422
  5,637
  5,862
  6,099
  6,348
  6,610
  6,887
  7,179
  7,486
  7,811
  8,154
  8,515
  8,896
  9,299
Total cash flow (excl. dividends), $m
  3,981
  4,450
  4,932
  5,431
  5,948
  6,483
  7,036
  7,608
  8,199
  8,811
  9,444
  10,100
  10,780
  11,486
  12,219
  12,981
  13,774
  14,600
  15,461
  16,359
  17,296
  18,274
  19,297
  20,365
  21,483
  22,653
  23,877
  25,159
  26,502
  27,909
Retained Cash Flow (-), $m
  -1,203
  -1,277
  -1,363
  -1,447
  -1,529
  -1,609
  -1,688
  -1,767
  -1,845
  -1,924
  -2,004
  -2,084
  -2,167
  -2,253
  -2,341
  -2,433
  -2,528
  -2,628
  -2,733
  -2,844
  -2,960
  -3,082
  -3,211
  -3,347
  -3,491
  -3,642
  -3,802
  -3,970
  -4,148
  -4,336
Prev. year cash balance distribution, $m
  734
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  3,511
  3,173
  3,569
  3,985
  4,420
  4,874
  5,348
  5,841
  6,354
  6,887
  7,440
  8,015
  8,613
  9,233
  9,878
  10,549
  11,246
  11,972
  12,728
  13,515
  14,336
  15,192
  16,085
  17,018
  17,993
  19,011
  20,075
  21,189
  22,354
  23,573
Discount rate, %
  4.40
  4.62
  4.85
  5.09
  5.35
  5.62
  5.90
  6.19
  6.50
  6.83
  7.17
  7.53
  7.90
  8.30
  8.71
  9.15
  9.60
  10.08
  10.59
  11.12
  11.67
  12.26
  12.87
  13.51
  14.19
  14.90
  15.64
  16.43
  17.25
  18.11
PV of cash for distribution, $m
  3,363
  2,899
  3,096
  3,266
  3,406
  3,512
  3,581
  3,612
  3,605
  3,558
  3,475
  3,356
  3,205
  3,025
  2,822
  2,600
  2,365
  2,124
  1,880
  1,641
  1,411
  1,193
  993
  812
  652
  514
  397
  300
  221
  160
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

PACCAR Inc (PACCAR) is a technology company. The Company's segments include Truck, Parts and Financial Services. The Truck segment includes the design, manufacture and distribution of light-, medium- and heavy-duty commercial trucks. The Company's trucks are marketed under the Kenworth, Peterbilt and DAF nameplates. It also manufactures engines, primarily for use in the Company's trucks, at its facilities in Columbus, Mississippi; Eindhoven, the Netherlands, and Ponta Grossa, Brazil. The Parts segment includes the distribution of aftermarket parts for trucks and related commercial vehicles. The Financial Services segment includes finance and leasing products and services provided to customers and dealers. Its Other business includes the manufacturing and marketing of industrial winches. The Company operates in Australia and Brazil and sells trucks and parts to customers in Asia, Africa, Middle East and South America.

FINANCIAL RATIOS  of  PACCAR Inc. (PCAR)

Valuation Ratios
P/E Ratio 45.4
Price to Sales 1.4
Price to Book 3.5
Price to Tangible Book
Price to Cash Flow 10.3
Price to Free Cash Flow 70.5
Growth Rates
Sales Growth Rate -10.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 13.9%
Cap. Spend. - 3 Yr. Gr. Rate 1%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 125%
Total Debt to Equity 125%
Interest Coverage 11
Management Effectiveness
Return On Assets 2.7%
Ret/ On Assets - 3 Yr. Avg. 5.9%
Return On Total Capital 3.4%
Ret/ On T. Cap. - 3 Yr. Avg. 7.7%
Return On Equity 7.6%
Return On Equity - 3 Yr. Avg. 17.1%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 19.7%
Gross Margin - 3 Yr. Avg. 19%
EBITDA Margin 13.1%
EBITDA Margin - 3 Yr. Avg. 15.6%
Operating Margin 6.4%
Oper. Margin - 3 Yr. Avg. 9.7%
Pre-Tax Margin 6.6%
Pre-Tax Margin - 3 Yr. Avg. 9.8%
Net Profit Margin 3.1%
Net Profit Margin - 3 Yr. Avg. 6.2%
Effective Tax Rate 53.8%
Eff/ Tax Rate - 3 Yr. Avg. 39.3%
Payout Ratio 158.8%

PCAR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PCAR stock intrinsic value calculation we used $23496 million for the last fiscal year's total revenue generated by PACCAR Inc.. The default revenue input number comes from 0001 income statement of PACCAR Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our PCAR stock valuation model: a) initial revenue growth rate of 15.1% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.4%, whose default value for PCAR is calculated based on our internal credit rating of PACCAR Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of PACCAR Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of PCAR stock the variable cost ratio is equal to 84.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $833 million in the base year in the intrinsic value calculation for PCAR stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for PACCAR Inc..

Corporate tax rate of 27% is the nominal tax rate for PACCAR Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the PCAR stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for PCAR are equal to 27.1%.

Life of production assets of 6 years is the average useful life of capital assets used in PACCAR Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for PCAR is equal to -4.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $8592.9 million for PACCAR Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 346.785 million for PACCAR Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of PACCAR Inc. at the current share price and the inputted number of shares is $23.4 billion.

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