Intrinsic value of Paccar - PCAR

Previous Close

$72.41

  Intrinsic Value

$613.21

stock screener

  Rating & Target

str. buy

+747%

Previous close

$72.41

 
Intrinsic value

$613.21

 
Up/down potential

+747%

 
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 25.5

 

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, %
  23.40
  21.56
  19.90
  18.41
  17.07
  15.87
  14.78
  13.80
  12.92
  12.13
  11.42
  10.77
  10.20
  9.68
  9.21
  8.79
  8.41
  8.07
  7.76
  7.49
  7.24
  7.01
  6.81
  6.63
  6.47
  6.32
  6.19
  6.07
  5.96
  5.87
Revenue, $m
  24,009
  29,186
  34,995
  41,438
  48,513
  56,210
  64,516
  73,420
  82,906
  92,962
  103,574
  114,733
  126,432
  138,667
  151,437
  164,746
  178,601
  193,011
  207,992
  223,562
  239,741
  256,555
  274,031
  292,202
  311,100
  330,765
  351,235
  372,555
  394,770
  417,930
Variable operating expenses, $m
  13,589
  16,519
  19,807
  23,454
  27,458
  31,815
  36,516
  41,556
  46,925
  52,616
  58,623
  64,939
  71,561
  78,486
  85,714
  93,246
  101,088
  109,244
  117,724
  126,536
  135,693
  145,210
  155,102
  165,386
  176,083
  187,213
  198,799
  210,866
  223,440
  236,549
Fixed operating expenses, $m
  6,422
  6,564
  6,708
  6,856
  7,006
  7,160
  7,318
  7,479
  7,644
  7,812
  7,984
  8,159
  8,339
  8,522
  8,710
  8,901
  9,097
  9,297
  9,502
  9,711
  9,924
  10,143
  10,366
  10,594
  10,827
  11,065
  11,309
  11,557
  11,812
  12,072
Total operating expenses, $m
  20,011
  23,083
  26,515
  30,310
  34,464
  38,975
  43,834
  49,035
  54,569
  60,428
  66,607
  73,098
  79,900
  87,008
  94,424
  102,147
  110,185
  118,541
  127,226
  136,247
  145,617
  155,353
  165,468
  175,980
  186,910
  198,278
  210,108
  222,423
  235,252
  248,621
Operating income, $m
  3,998
  6,103
  8,480
  11,129
  14,048
  17,234
  20,682
  24,385
  28,338
  32,534
  36,968
  41,635
  46,533
  51,659
  57,014
  62,599
  68,416
  74,470
  80,767
  87,315
  94,123
  101,202
  108,564
  116,222
  124,191
  132,487
  141,128
  150,132
  159,519
  169,310
EBITDA, $m
  5,374
  7,776
  10,486
  13,504
  16,829
  20,456
  24,380
  28,594
  33,090
  37,862
  42,905
  48,212
  53,780
  59,608
  65,695
  72,042
  78,653
  85,533
  92,689
  100,130
  107,865
  115,908
  124,272
  132,971
  142,023
  151,447
  161,261
  171,487
  182,148
  193,267
Interest expense (income), $m
  108
  479
  674
  895
  1,143
  1,419
  1,721
  2,050
  2,405
  2,785
  3,190
  3,620
  4,073
  4,550
  5,050
  5,572
  6,118
  6,687
  7,278
  7,894
  8,534
  9,199
  9,890
  10,609
  11,355
  12,132
  12,939
  13,779
  14,654
  15,564
  16,513
Earnings before tax, $m
  3,518
  5,429
  7,584
  9,985
  12,630
  15,513
  18,632
  21,981
  25,553
  29,343
  33,348
  37,562
  41,983
  46,610
  51,442
  56,481
  61,729
  67,191
  72,873
  78,781
  84,924
  91,312
  97,955
  104,866
  112,059
  119,548
  127,348
  135,478
  143,954
  152,797
Tax expense, $m
  950
  1,466
  2,048
  2,696
  3,410
  4,189
  5,031
  5,935
  6,899
  7,923
  9,004
  10,142
  11,335
  12,585
  13,889
  15,250
  16,667
  18,142
  19,676
  21,271
  22,929
  24,654
  26,448
  28,314
  30,256
  32,278
  34,384
  36,579
  38,868
  41,255
Net income, $m
  2,568
  3,963
  5,537
  7,289
  9,220
  11,325
  13,602
  16,046
  18,654
  21,421
  24,344
  27,420
  30,648
  34,025
  37,552
  41,231
  45,062
  49,050
  53,197
  57,510
  61,994
  66,657
  71,507
  76,552
  81,803
  87,270
  92,964
  98,899
  105,087
  111,542

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
  28,015
  34,056
  40,834
  48,353
  56,608
  65,589
  75,282
  85,671
  96,740
  108,474
  120,857
  133,878
  147,529
  161,805
  176,706
  192,236
  208,402
  225,217
  242,698
  260,866
  279,744
  299,364
  319,756
  340,959
  363,011
  385,957
  409,843
  434,720
  460,642
  487,667
Adjusted assets (=assets-cash), $m
  28,015
  34,056
  40,834
  48,353
  56,608
  65,589
  75,282
  85,671
  96,740
  108,474
  120,857
  133,878
  147,529
  161,805
  176,706
  192,236
  208,402
  225,217
  242,698
  260,866
  279,744
  299,364
  319,756
  340,959
  363,011
  385,957
  409,843
  434,720
  460,642
  487,667
Revenue / Adjusted assets
  0.857
  0.857
  0.857
  0.857
  0.857
  0.857
  0.857
  0.857
  0.857
  0.857
  0.857
  0.857
  0.857
  0.857
  0.857
  0.857
  0.857
  0.857
  0.857
  0.857
  0.857
  0.857
  0.857
  0.857
  0.857
  0.857
  0.857
  0.857
  0.857
  0.857
Average production assets, $m
  7,707
  9,369
  11,233
  13,302
  15,573
  18,043
  20,710
  23,568
  26,613
  29,841
  33,247
  36,829
  40,585
  44,512
  48,611
  52,884
  57,331
  61,957
  66,766
  71,763
  76,957
  82,354
  87,964
  93,797
  99,863
  106,176
  112,747
  119,590
  126,721
  134,156
Working capital, $m
  -792
  -963
  -1,155
  -1,367
  -1,601
  -1,855
  -2,129
  -2,423
  -2,736
  -3,068
  -3,418
  -3,786
  -4,172
  -4,576
  -4,997
  -5,437
  -5,894
  -6,369
  -6,864
  -7,378
  -7,911
  -8,466
  -9,043
  -9,643
  -10,266
  -10,915
  -11,591
  -12,294
  -13,027
  -13,792
Total debt, $m
  12,484
  16,579
  21,175
  26,273
  31,870
  37,959
  44,531
  51,575
  59,080
  67,035
  75,430
  84,259
  93,514
  103,194
  113,297
  123,826
  134,786
  146,187
  158,039
  170,357
  183,156
  196,458
  210,285
  224,660
  239,611
  255,168
  271,363
  288,230
  305,805
  324,128
Total liabilities, $m
  18,994
  23,090
  27,685
  32,783
  38,380
  44,469
  51,041
  58,085
  65,590
  73,545
  81,941
  90,769
  100,025
  109,704
  119,807
  130,336
  141,297
  152,697
  164,549
  176,867
  189,667
  202,969
  216,795
  231,170
  246,121
  261,679
  277,873
  294,740
  312,316
  330,638
Total equity, $m
  9,021
  10,966
  13,149
  15,570
  18,228
  21,120
  24,241
  27,586
  31,150
  34,928
  38,916
  43,109
  47,504
  52,101
  56,899
  61,900
  67,106
  72,520
  78,149
  83,999
  90,078
  96,395
  102,962
  109,789
  116,890
  124,278
  131,969
  139,980
  148,327
  157,029
Total liabilities and equity, $m
  28,015
  34,056
  40,834
  48,353
  56,608
  65,589
  75,282
  85,671
  96,740
  108,473
  120,857
  133,878
  147,529
  161,805
  176,706
  192,236
  208,403
  225,217
  242,698
  260,866
  279,745
  299,364
  319,757
  340,959
  363,011
  385,957
  409,842
  434,720
  460,643
  487,667
Debt-to-equity ratio
  1.380
  1.510
  1.610
  1.690
  1.750
  1.800
  1.840
  1.870
  1.900
  1.920
  1.940
  1.950
  1.970
  1.980
  1.990
  2.000
  2.010
  2.020
  2.020
  2.030
  2.030
  2.040
  2.040
  2.050
  2.050
  2.050
  2.060
  2.060
  2.060
  2.060
Adjusted equity ratio
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,568
  3,963
  5,537
  7,289
  9,220
  11,325
  13,602
  16,046
  18,654
  21,421
  24,344
  27,420
  30,648
  34,025
  37,552
  41,231
  45,062
  49,050
  53,197
  57,510
  61,994
  66,657
  71,507
  76,552
  81,803
  87,270
  92,964
  98,899
  105,087
  111,542
Depreciation, amort., depletion, $m
  1,376
  1,673
  2,006
  2,375
  2,781
  3,222
  3,698
  4,209
  4,752
  5,329
  5,937
  6,577
  7,247
  7,949
  8,681
  9,443
  10,238
  11,064
  11,922
  12,815
  13,742
  14,706
  15,708
  16,749
  17,833
  18,960
  20,133
  21,355
  22,629
  23,956
Funds from operations, $m
  3,945
  5,636
  7,543
  9,665
  12,000
  14,547
  17,300
  20,254
  23,406
  26,749
  30,281
  33,997
  37,895
  41,974
  46,233
  50,674
  55,300
  60,113
  65,120
  70,325
  75,737
  81,364
  87,215
  93,302
  99,636
  106,230
  113,098
  120,254
  127,715
  135,498
Change in working capital, $m
  -150
  -171
  -192
  -213
  -233
  -254
  -274
  -294
  -313
  -332
  -350
  -368
  -386
  -404
  -421
  -439
  -457
  -476
  -494
  -514
  -534
  -555
  -577
  -600
  -624
  -649
  -676
  -704
  -733
  -764
Cash from operations, $m
  4,095
  5,807
  7,734
  9,877
  12,234
  14,801
  17,574
  20,548
  23,719
  27,081
  30,631
  34,365
  38,281
  42,377
  46,655
  51,114
  55,757
  60,589
  65,614
  70,839
  76,271
  81,918
  87,792
  93,901
  100,259
  106,879
  113,773
  120,958
  128,449
  136,262
Maintenance CAPEX, $m
  -1,116
  -1,376
  -1,673
  -2,006
  -2,375
  -2,781
  -3,222
  -3,698
  -4,209
  -4,752
  -5,329
  -5,937
  -6,577
  -7,247
  -7,949
  -8,681
  -9,443
  -10,238
  -11,064
  -11,922
  -12,815
  -13,742
  -14,706
  -15,708
  -16,749
  -17,833
  -18,960
  -20,133
  -21,355
  -22,629
New CAPEX, $m
  -1,455
  -1,662
  -1,865
  -2,068
  -2,271
  -2,471
  -2,667
  -2,858
  -3,045
  -3,228
  -3,407
  -3,582
  -3,755
  -3,927
  -4,099
  -4,272
  -4,447
  -4,626
  -4,809
  -4,998
  -5,194
  -5,397
  -5,610
  -5,833
  -6,066
  -6,312
  -6,571
  -6,844
  -7,131
  -7,434
Cash from investing activities, $m
  -2,571
  -3,038
  -3,538
  -4,074
  -4,646
  -5,252
  -5,889
  -6,556
  -7,254
  -7,980
  -8,736
  -9,519
  -10,332
  -11,174
  -12,048
  -12,953
  -13,890
  -14,864
  -15,873
  -16,920
  -18,009
  -19,139
  -20,316
  -21,541
  -22,815
  -24,145
  -25,531
  -26,977
  -28,486
  -30,063
Free cash flow, $m
  1,524
  2,769
  4,197
  5,803
  7,588
  9,549
  11,685
  13,992
  16,465
  19,101
  21,896
  24,846
  27,949
  31,203
  34,607
  38,161
  41,866
  45,725
  49,741
  53,919
  58,262
  62,779
  67,476
  72,361
  77,443
  82,734
  88,242
  93,981
  99,962
  106,199
Issuance/(repayment) of debt, $m
  3,605
  4,095
  4,596
  5,098
  5,597
  6,089
  6,572
  7,044
  7,505
  7,955
  8,396
  8,828
  9,255
  9,679
  10,103
  10,529
  10,961
  11,401
  11,852
  12,317
  12,800
  13,302
  13,826
  14,375
  14,951
  15,557
  16,195
  16,867
  17,575
  18,323
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  
  3,605
  4,095
  4,596
  5,098
  5,597
  6,089
  6,572
  7,044
  7,505
  7,955
  8,396
  8,828
  9,255
  9,679
  10,103
  10,529
  10,961
  11,401
  11,852
  12,317
  12,800
  13,302
  13,826
  14,375
  14,951
  15,557
  16,195
  16,867
  17,575
  18,323
Total cash flow (excl. dividends), $m
  5,128
  6,864
  8,792
  10,901
  13,184
  15,638
  18,257
  21,036
  23,970
  27,056
  30,291
  33,674
  37,204
  40,882
  44,710
  48,690
  52,827
  57,126
  61,593
  66,236
  71,062
  76,081
  81,302
  86,736
  92,395
  98,291
  104,437
  110,848
  117,537
  124,522
Retained Cash Flow (-), $m
  -1,711
  -1,945
  -2,183
  -2,421
  -2,658
  -2,892
  -3,121
  -3,345
  -3,564
  -3,778
  -3,987
  -4,193
  -4,396
  -4,597
  -4,798
  -5,001
  -5,206
  -5,414
  -5,629
  -5,850
  -6,079
  -6,317
  -6,566
  -6,827
  -7,101
  -7,389
  -7,691
  -8,010
  -8,347
  -8,702
Prev. year cash balance distribution, $m
  740
  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
  4,158
  4,919
  6,610
  8,480
  10,526
  12,747
  15,136
  17,691
  20,406
  23,278
  26,304
  29,481
  32,809
  36,285
  39,911
  43,689
  47,621
  51,712
  55,965
  60,386
  64,983
  69,763
  74,735
  79,909
  85,294
  90,902
  96,746
  102,837
  109,190
  115,820
Discount rate, %
  4.50
  4.73
  4.96
  5.21
  5.47
  5.74
  6.03
  6.33
  6.65
  6.98
  7.33
  7.70
  8.08
  8.49
  8.91
  9.36
  9.82
  10.31
  10.83
  11.37
  11.94
  12.54
  13.16
  13.82
  14.51
  15.24
  16.00
  16.80
  17.64
  18.52
PV of cash for distribution, $m
  3,979
  4,485
  5,716
  6,921
  8,066
  9,118
  10,046
  10,825
  11,433
  11,854
  12,081
  12,110
  11,946
  11,602
  11,094
  10,446
  9,683
  8,835
  7,933
  7,006
  6,083
  5,190
  4,348
  3,574
  2,881
  2,275
  1,759
  1,330
  982
  708
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 (PCAR)

Valuation Ratios
P/E Ratio 48.6
Price to Sales 1.5
Price to Book 3.7
Price to Tangible Book
Price to Cash Flow 11
Price to Free Cash Flow 75.6
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 $19456.4 million for the last fiscal year's total revenue generated by Paccar. The default revenue input number comes from 0001 income statement of Paccar. 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 23.4% 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 4.5%, whose default value for PCAR is calculated based on our internal credit rating of Paccar, 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.
    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 56.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $6284 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.

Corporate tax rate of 27% is the nominal tax rate for Paccar. 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 32.1%.

Life of production assets of 5.6 years is the average useful life of capital assets used in Paccar 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 -3.3%. 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 - $8050.5 million for Paccar - 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 351.812 million for Paccar 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 at the current share price and the inputted number of shares is $25.5 billion.

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COMPANY NEWS

▶ 5 Best Bargain PEG Stocks for Value Investors   [Sep-12-18 09:17AM  Zacks]
▶ PACCAR Declares Regular Quarterly Cash Dividend   [Sep-11-18 11:15AM  Business Wire]
▶ SUVs Boost August Auto Sales: 4 Stocks to Buy   [Sep-05-18 11:25AM  InvestorPlace]
▶ Check If Insiders Are Selling PACCAR Inc (NASDAQ:PCAR)   [Aug-28-18 10:28AM  Simply Wall St.]
▶ Here's how much you can save buying a used car instead of a new one   [Aug-24-18 01:07PM  Yahoo Finance Video]
▶ PACCAR Inc to Host Earnings Call   [10:00AM  ACCESSWIRE]
▶ Paccar: 2Q Earnings Snapshot   [08:17AM  Associated Press]
▶ PACCAR's Q2 Earnings Outlook   [Jul-23-18 04:24PM  Benzinga]
▶ Company News For Jul 11, 2018   [Jul-11-18 10:04AM  Zacks]
▶ After-hours buzz: PCAR, WHD & more   [Jul-09-18 05:43PM  CNBC]
▶ 5 Cheap Large Cap Stocks to Buy Now   [Jun-28-18 11:10AM  InvestorPlace]
▶ Macquarie Finds Plenty Of Reasons To Like Paccar   [Jun-05-18 11:52AM  Benzinga]
▶ Paccar Stock Falls After Goldman Sachs Downgrade   [May-31-18 04:18PM  TheStreet.com]
▶ Why Paccar Won't Keep on Trucking   [10:53AM  Barrons.com]
▶ PACCAR Investor Conference   [May-16-18 05:00PM  Business Wire]
▶ Peterbilt to make an all-electric truck as Tesla's semi faces uncertainty   [May-11-18 07:18AM  American City Business Journals]

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