Intrinsic value of Paccar - PCAR

Previous Close

$76.54

  Intrinsic Value

$293.04

stock screener

  Rating & Target

str. buy

+283%

Previous close

$76.54

 
Intrinsic value

$293.04

 
Up/down potential

+283%

 
Rating

str. buy

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -10.89
  19.10
  17.69
  16.42
  15.28
  14.25
  13.33
  12.49
  11.74
  11.07
  10.46
  9.92
  9.42
  8.98
  8.58
  8.23
  7.90
  7.61
  7.35
  7.12
  6.90
  6.71
  6.54
  6.39
  6.25
  6.12
  6.01
  5.91
  5.82
  5.74
  5.66
Revenue, $m
  17,033
  20,286
  23,875
  27,795
  32,042
  36,609
  41,487
  46,670
  52,151
  57,924
  63,984
  70,329
  76,958
  83,870
  91,070
  98,561
  106,350
  114,446
  122,860
  131,603
  140,690
  150,136
  159,959
  170,178
  180,814
  191,888
  203,425
  215,449
  227,988
  241,070
  254,724
Variable operating expenses, $m
 
  8,317
  9,789
  11,396
  13,137
  15,010
  17,010
  19,135
  21,382
  23,749
  26,234
  28,835
  31,553
  34,387
  37,339
  40,410
  43,604
  46,923
  50,372
  53,957
  57,683
  61,556
  65,583
  69,773
  74,134
  78,674
  83,404
  88,334
  93,475
  98,839
  104,437
Fixed operating expenses, $m
 
  9,421
  9,656
  9,898
  10,145
  10,399
  10,659
  10,925
  11,198
  11,478
  11,765
  12,059
  12,361
  12,670
  12,987
  13,311
  13,644
  13,985
  14,335
  14,693
  15,061
  15,437
  15,823
  16,219
  16,624
  17,040
  17,466
  17,902
  18,350
  18,809
  19,279
Total operating expenses, $m
  15,945
  17,738
  19,445
  21,294
  23,282
  25,409
  27,669
  30,060
  32,580
  35,227
  37,999
  40,894
  43,914
  47,057
  50,326
  53,721
  57,248
  60,908
  64,707
  68,650
  72,744
  76,993
  81,406
  85,992
  90,758
  95,714
  100,870
  106,236
  111,825
  117,648
  123,716
Operating income, $m
  1,088
  2,548
  4,430
  6,502
  8,760
  11,200
  13,819
  16,610
  19,571
  22,697
  25,986
  29,435
  33,044
  36,814
  40,744
  44,840
  49,102
  53,538
  58,152
  62,952
  67,946
  73,143
  78,553
  84,186
  90,056
  96,174
  102,555
  109,213
  116,163
  123,423
  131,009
EBITDA, $m
  2,081
  3,723
  5,813
  8,112
  10,616
  13,321
  16,222
  19,314
  22,592
  26,052
  29,692
  33,509
  37,502
  41,672
  46,020
  50,549
  55,263
  60,168
  65,270
  70,576
  76,097
  81,841
  87,819
  94,045
  100,531
  107,290
  114,340
  121,694
  129,371
  137,388
  145,765
Interest expense (income), $m
  108
  297
  389
  491
  603
  723
  853
  992
  1,140
  1,296
  1,460
  1,633
  1,813
  2,002
  2,199
  2,404
  2,617
  2,838
  3,069
  3,308
  3,557
  3,816
  4,085
  4,364
  4,655
  4,958
  5,273
  5,601
  5,944
  6,301
  6,673
Earnings before tax, $m
  1,130
  2,252
  4,041
  6,011
  8,157
  10,477
  12,965
  15,618
  18,431
  21,401
  24,525
  27,802
  31,231
  34,812
  38,546
  42,436
  46,486
  50,700
  55,084
  59,644
  64,389
  69,327
  74,468
  79,822
  85,401
  91,216
  97,282
  103,611
  110,219
  117,122
  124,336
Tax expense, $m
  608
  608
  1,091
  1,623
  2,202
  2,829
  3,501
  4,217
  4,976
  5,778
  6,622
  7,507
  8,432
  9,399
  10,407
  11,458
  12,551
  13,689
  14,873
  16,104
  17,385
  18,718
  20,106
  21,552
  23,058
  24,628
  26,266
  27,975
  29,759
  31,623
  33,571
Net income, $m
  522
  1,644
  2,950
  4,388
  5,955
  7,648
  9,465
  11,401
  13,455
  15,623
  17,904
  20,296
  22,799
  25,413
  28,138
  30,978
  33,935
  37,011
  40,211
  43,540
  47,004
  50,609
  54,362
  58,270
  62,343
  66,588
  71,016
  75,636
  80,460
  85,499
  90,765

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  3,057
  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
  20,639
  20,935
  24,639
  28,685
  33,067
  37,780
  42,814
  48,163
  53,820
  59,777
  66,031
  72,579
  79,420
  86,553
  93,983
  101,714
  109,752
  118,108
  126,790
  135,813
  145,191
  154,939
  165,076
  175,622
  186,598
  198,027
  209,933
  222,342
  235,282
  248,782
  262,873
Adjusted assets (=assets-cash), $m
  17,582
  20,935
  24,639
  28,685
  33,067
  37,780
  42,814
  48,163
  53,820
  59,777
  66,031
  72,579
  79,420
  86,553
  93,983
  101,714
  109,752
  118,108
  126,790
  135,813
  145,191
  154,939
  165,076
  175,622
  186,598
  198,027
  209,933
  222,342
  235,282
  248,782
  262,873
Revenue / Adjusted assets
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
  0.969
Average production assets, $m
  5,724
  6,816
  8,022
  9,339
  10,766
  12,301
  13,940
  15,681
  17,523
  19,462
  21,499
  23,631
  25,858
  28,180
  30,599
  33,116
  35,734
  38,454
  41,281
  44,219
  47,272
  50,446
  53,746
  57,180
  60,753
  64,474
  68,351
  72,391
  76,604
  80,999
  85,587
Working capital, $m
  11,070
  9,535
  11,221
  13,064
  15,060
  17,206
  19,499
  21,935
  24,511
  27,224
  30,073
  33,055
  36,170
  39,419
  42,803
  46,324
  49,985
  53,790
  57,744
  61,853
  66,124
  70,564
  75,181
  79,984
  84,982
  90,187
  95,610
  101,261
  107,154
  113,303
  119,720
Total debt, $m
  8,475
  11,111
  14,029
  17,218
  20,671
  24,384
  28,352
  32,567
  37,024
  41,718
  46,647
  51,807
  57,197
  62,818
  68,673
  74,765
  81,099
  87,683
  94,525
  101,635
  109,024
  116,706
  124,694
  133,004
  141,653
  150,659
  160,041
  169,819
  180,016
  190,654
  201,758
Total liabilities, $m
  13,861
  16,497
  19,415
  22,604
  26,057
  29,770
  33,738
  37,953
  42,410
  47,104
  52,033
  57,193
  62,583
  68,204
  74,059
  80,151
  86,485
  93,069
  99,911
  107,021
  114,410
  122,092
  130,080
  138,390
  147,039
  156,045
  165,427
  175,205
  185,402
  196,040
  207,144
Total equity, $m
  6,778
  4,438
  5,223
  6,081
  7,010
  8,009
  9,077
  10,211
  11,410
  12,673
  13,999
  15,387
  16,837
  18,349
  19,924
  21,563
  23,268
  25,039
  26,880
  28,792
  30,780
  32,847
  34,996
  37,232
  39,559
  41,982
  44,506
  47,136
  49,880
  52,742
  55,729
Total liabilities and equity, $m
  20,639
  20,935
  24,638
  28,685
  33,067
  37,779
  42,815
  48,164
  53,820
  59,777
  66,032
  72,580
  79,420
  86,553
  93,983
  101,714
  109,753
  118,108
  126,791
  135,813
  145,190
  154,939
  165,076
  175,622
  186,598
  198,027
  209,933
  222,341
  235,282
  248,782
  262,873
Debt-to-equity ratio
  1.250
  2.500
  2.690
  2.830
  2.950
  3.040
  3.120
  3.190
  3.240
  3.290
  3.330
  3.370
  3.400
  3.420
  3.450
  3.470
  3.490
  3.500
  3.520
  3.530
  3.540
  3.550
  3.560
  3.570
  3.580
  3.590
  3.600
  3.600
  3.610
  3.610
  3.620
Adjusted equity ratio
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212
  0.212

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  522
  1,644
  2,950
  4,388
  5,955
  7,648
  9,465
  11,401
  13,455
  15,623
  17,904
  20,296
  22,799
  25,413
  28,138
  30,978
  33,935
  37,011
  40,211
  43,540
  47,004
  50,609
  54,362
  58,270
  62,343
  66,588
  71,016
  75,636
  80,460
  85,499
  90,765
Depreciation, amort., depletion, $m
  993
  1,175
  1,383
  1,610
  1,856
  2,121
  2,403
  2,704
  3,021
  3,356
  3,707
  4,074
  4,458
  4,859
  5,276
  5,710
  6,161
  6,630
  7,117
  7,624
  8,150
  8,698
  9,267
  9,859
  10,475
  11,116
  11,785
  12,481
  13,208
  13,965
  14,756
Funds from operations, $m
  3,007
  2,819
  4,333
  5,998
  7,811
  9,769
  11,868
  14,105
  16,476
  18,978
  21,610
  24,370
  27,257
  30,271
  33,414
  36,688
  40,096
  43,641
  47,328
  51,164
  55,154
  59,306
  63,628
  68,129
  72,817
  77,704
  82,800
  88,117
  93,668
  99,465
  105,521
Change in working capital, $m
  706
  1,529
  1,687
  1,843
  1,996
  2,146
  2,293
  2,436
  2,576
  2,713
  2,848
  2,982
  3,115
  3,249
  3,384
  3,521
  3,661
  3,805
  3,954
  4,109
  4,271
  4,440
  4,617
  4,803
  4,999
  5,205
  5,422
  5,651
  5,893
  6,148
  6,418
Cash from operations, $m
  2,301
  1,290
  2,646
  4,155
  5,815
  7,623
  9,575
  11,669
  13,900
  16,265
  18,762
  21,388
  24,142
  27,022
  30,030
  33,167
  36,435
  39,836
  43,374
  47,055
  50,884
  54,867
  59,011
  63,326
  67,819
  72,499
  77,378
  82,466
  87,774
  93,316
  99,104
Maintenance CAPEX, $m
  0
  -987
  -1,175
  -1,383
  -1,610
  -1,856
  -2,121
  -2,403
  -2,704
  -3,021
  -3,356
  -3,707
  -4,074
  -4,458
  -4,859
  -5,276
  -5,710
  -6,161
  -6,630
  -7,117
  -7,624
  -8,150
  -8,698
  -9,267
  -9,859
  -10,475
  -11,116
  -11,785
  -12,481
  -13,208
  -13,965
New CAPEX, $m
  -1,965
  -1,093
  -1,206
  -1,317
  -1,427
  -1,534
  -1,639
  -1,742
  -1,842
  -1,940
  -2,036
  -2,132
  -2,227
  -2,323
  -2,419
  -2,517
  -2,617
  -2,720
  -2,827
  -2,938
  -3,053
  -3,174
  -3,301
  -3,434
  -3,574
  -3,721
  -3,876
  -4,040
  -4,213
  -4,395
  -4,588
Cash from investing activities, $m
  -1,564
  -2,080
  -2,381
  -2,700
  -3,037
  -3,390
  -3,760
  -4,145
  -4,546
  -4,961
  -5,392
  -5,839
  -6,301
  -6,781
  -7,278
  -7,793
  -8,327
  -8,881
  -9,457
  -10,055
  -10,677
  -11,324
  -11,999
  -12,701
  -13,433
  -14,196
  -14,992
  -15,825
  -16,694
  -17,603
  -18,553
Free cash flow, $m
  737
  -790
  265
  1,455
  2,778
  4,232
  5,815
  7,524
  9,355
  11,304
  13,370
  15,549
  17,840
  20,241
  22,753
  25,374
  28,108
  30,954
  33,917
  37,000
  40,207
  43,542
  47,013
  50,626
  54,386
  58,304
  62,385
  66,641
  71,080
  75,713
  80,551
Issuance/(repayment) of debt, $m
  47
  2,636
  2,918
  3,188
  3,454
  3,713
  3,967
  4,215
  4,457
  4,695
  4,928
  5,160
  5,390
  5,621
  5,855
  6,092
  6,334
  6,584
  6,842
  7,110
  7,389
  7,682
  7,988
  8,310
  8,649
  9,006
  9,382
  9,778
  10,197
  10,638
  11,104
Issuance/(repurchase) of shares, $m
  -71
  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  
  5
  2,636
  2,918
  3,188
  3,454
  3,713
  3,967
  4,215
  4,457
  4,695
  4,928
  5,160
  5,390
  5,621
  5,855
  6,092
  6,334
  6,584
  6,842
  7,110
  7,389
  7,682
  7,988
  8,310
  8,649
  9,006
  9,382
  9,778
  10,197
  10,638
  11,104
Total cash flow (excl. dividends), $m
  728
  1,846
  3,184
  4,643
  6,231
  7,946
  9,782
  11,739
  13,812
  15,999
  18,298
  20,709
  23,230
  25,863
  28,607
  31,466
  34,442
  37,538
  40,759
  44,110
  47,596
  51,224
  55,002
  58,936
  63,035
  67,309
  71,767
  76,420
  81,277
  86,351
  91,655
Retained Cash Flow (-), $m
  162
  -717
  -785
  -858
  -929
  -999
  -1,067
  -1,134
  -1,199
  -1,263
  -1,326
  -1,388
  -1,450
  -1,512
  -1,575
  -1,639
  -1,704
  -1,771
  -1,841
  -1,913
  -1,988
  -2,067
  -2,149
  -2,236
  -2,327
  -2,423
  -2,524
  -2,631
  -2,743
  -2,862
  -2,987
Prev. year cash balance distribution, $m
 
  3,057
  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
 
  4,186
  2,399
  3,785
  5,302
  6,947
  8,715
  10,605
  12,613
  14,736
  16,972
  19,321
  21,780
  24,350
  27,032
  29,827
  32,738
  35,767
  38,918
  42,197
  45,608
  49,158
  52,852
  56,700
  60,709
  64,886
  69,243
  73,789
  78,534
  83,489
  88,667
Discount rate, %
 
  6.30
  6.62
  6.95
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.78
  11.31
  11.88
  12.47
  13.10
  13.75
  14.44
  15.16
  15.92
  16.72
  17.55
  18.43
  19.35
  20.32
  21.33
  22.40
  23.52
  24.70
  25.93
PV of cash for distribution, $m
 
  3,938
  2,110
  3,095
  4,001
  4,803
  5,480
  6,013
  6,393
  6,615
  6,680
  6,597
  6,379
  6,045
  5,615
  5,115
  4,569
  4,001
  3,434
  2,887
  2,376
  1,914
  1,507
  1,159
  870
  637
  454
  315
  212
  139
  88
Current shareholders' claim on cash, %
  100
  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 51.4
Price to Sales 1.6
Price to Book 4
Price to Tangible Book
Price to Cash Flow 11.7
Price to Free Cash Flow 79.9
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 $17033 million for the last fiscal year's total revenue generated by Paccar. The default revenue input number comes from 2016 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 19.1% 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 6.3%, 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 41%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $9191 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 3.5% 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 33.6%.

Life of production assets of 5.8 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 47%. 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 - $6778 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 353.405 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 $27.0 billion.

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COMPANY NEWS

▶ ETFs with exposure to PACCAR, Inc. : December 27, 2017   [Dec-27-17 11:39AM  Capital Cube]
▶ PACCAR Recognizes Top Performing Suppliers in North America   [Dec-01-17 09:00AM  Business Wire]
▶ Paccar: Are Electric Trucks Friend or Foe?   [Nov-29-17 02:10PM  Barrons.com]
▶ Thanksgiving air travel will reach record numbers, how to prepare   [Nov-20-17 10:45AM  Yahoo Finance Video]
▶ GOP bargains over tax plan   [08:57AM  Yahoo Finance]
▶ The Biggest Loser: Tesla's Latest Victim?   [Nov-17-17 05:56PM  Barrons.com]
▶ At $70.52, Is It Time To Buy PACCAR Inc (PCAR)?   [Nov-09-17 02:25PM  Simply Wall St.]
▶ 3 of the Best Auto Stocks Right Now   [Nov-08-17 05:50PM  Zacks]
▶ With city help, Hunt Southwest starts new spec project in McKinney   [Nov-01-17 02:40PM  American City Business Journals]
▶ Why Whirlpool, HNI, and PACCAR Slumped Today   [Oct-24-17 04:34PM  Motley Fool]
▶ PACCAR Inc to Host Earnings Call   [08:35AM  ACCESSWIRE]
▶ Paccar tops Street 3Q forecasts   [08:23AM  Associated Press]
▶ ETFs with exposure to PACCAR, Inc. : October 23, 2017   [Oct-23-17 10:56AM  Capital Cube]
▶ Machinery: Buy Caterpillar, United Rentals; Skip Paccar   [Oct-11-17 09:47AM  Barrons.com]
▶ ETFs with exposure to PACCAR, Inc. : October 5, 2017   [Oct-05-17 11:15AM  Capital Cube]
▶ GM and Ford beat sales expectations   [Oct-03-17 10:25AM  Yahoo Finance Video]
▶ ETFs with exposure to PACCAR, Inc. : September 25, 2017   [Sep-25-17 10:43AM  Capital Cube]
▶ Stocks Generating Improved Relative Strength: Paccar   [Sep-19-17 03:00AM  Investor's Business Daily]
▶ ETFs with exposure to PACCAR, Inc. : September 14, 2017   [Sep-14-17 06:54PM  Capital Cube]
▶ PACCAR Declares Regular Quarterly Cash Dividend   [Sep-12-17 01:01PM  Business Wire]
Financial statements of PCAR
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