PACCAR revenue beats 13.5% as Parts, Financial Services hit records
CEO forecasts stronger truck market in 2026 as orders rise; company returns $2.72/share in dividends
PACCAR delivered a mixed fourth-quarter performance that underscored the strength of its ancillary businesses, with revenue surpassing analyst expectations by 13.5% to $6.82 billion even as earnings per share fell short of forecasts.
The Bellevue, Washington-based truck manufacturer reported adjusted earnings per share of $1.06, missing the $1.15 consensus estimate by 7.7%. However, the top-line performance proved more resilient, with the company noting that its PACCAR Parts and Financial Services segments delivered record quarterly revenues.
The contrasting results reflect the company's strategic pivot toward higher-margin services and aftermarket operations. For the full year 2025, PACCAR achieved adjusted earnings per share of $5.01, marking the fourth-best result in its 120-year history.
Chief Executive Preston Feight offered an optimistic outlook for the coming year, telling investors that "the truck market is responding to the clarification of tariff policy and emissions regulations, which combined with early improvements in freight fundamentals, should lead to a stronger truck market in 2026."
The company's projections align with this confidence. PACCAR forecasts Class 8 industry retail sales in the U.S. and Canada will reach between 230,000 and 270,000 units in 2026, representing approximately a 5% increase at the midpoint compared to 2025 estimates of 230,000 to 245,000 vehicles.
The December orders data lends credence to this view. Retail sales for Class 8 trucks in the U.S. and Canada reached 22,120 units in December, providing a solid conclusion to what had been a challenging year for the industry. The uptick suggests that freight demand may be stabilizing after a prolonged period of softness.
PACCAR's Financial Services division has emerged as a critical profit buffer during industry downturns, consistently demonstrating strong profitability. Analysts had projected Financial Services revenue of $570.23 million for the fourth quarter, up 4.8% year-over-year, while Parts revenue was expected to reach $1.74 billion, an increase of 4.1% from the prior year.
The company rewarded shareholders with substantial capital returns throughout 2025. PACCAR paid a total of $2.72 per share in dividends for the year, including a special dividend of $1.40 per share that was paid in January 2026. Regular quarterly dividends of $0.33 per share were distributed throughout the year.
The stock has reflected the company's improving prospects. PACCAR shares closed at $122.11 on January 27, up 24.1% over the past three months and 13.9% over the last 12 months. The company's market capitalization stands at approximately $64 billion.
Analyst sentiment remains cautiously constructive. The consensus rating leans toward "Moderate Buy," with seven analysts maintaining buy ratings, thirteen at hold, and none recommending sell. The average analyst target price sits at $117.32, slightly below current trading levels.
The mixed earnings result comes amid broader questions about the commercial vehicle cycle. Heavy-duty truck demand has softened following a post-pandemic surge, though the industry has benefited from replacement demand and a gradual recovery in freight volumes.
PACCAR's diversified business model—with its portfolio of premium truck brands including Kenworth, Peterbilt, and DAF, combined with its robust parts and financing operations—has historically provided resilience through cyclical downturns. The record revenues in Parts and Financial Services during the quarter suggest that strategy is delivering as intended.
Looking ahead, the key watch item will be whether the December momentum in orders translates into sustained demand through 2026. The CEO's comments on tariff clarity and regulatory certainty suggest the company believes the worst of the industry trough may be in the rearview mirror.
Investors will also monitor whether the company can maintain its dividend policies, particularly the generous special dividend program, given the mixed earnings performance. With the shares trading at roughly 24 times trailing earnings, much of the optimism for a 2026 recovery appears already priced into the stock.