Trucking company PACCAR (NASDAQ: PCAR) reported Q3 CY2025 results exceeding the market’s revenue expectations, but sales fell by 19.1% year on year to $6.67 billion. Its GAAP profit of $1.12 per share was 2.6% below analysts’ consensus estimates.

Is now the time to buy PACCAR? Find out by accessing our full research report, it’s free for active Edge members.

BELLEVUE, Wash.--(BUSINESS WIRE)--“PACCAR achieved good revenues and net income in the second quarter of 2025,” said Preston Feight, chief executive officer.

Company Overview

Founded more than a century ago, PACCAR (NASDAQ: PCAR) designs and manufactures commercial trucks of various weights and sizes for the commercial trucking industry.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, PACCAR’s 8.9% annualized revenue growth over the last five years was decent. Its growth was slightly above the average industrials company and shows its offerings resonate with customers.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. PACCAR’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 7.1% over the last two years. PACCAR isn’t alone in its struggles as the Heavy Transportation Equipment industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time.

This quarter, PACCAR’s revenue fell by 19.1% year on year to $6.67 billion but beat Wall Street’s estimates by 0.8%.

Looking ahead, sell-side analysts expect revenue to decline by 2.4% over the next 12 months. While this projection is better than its two-year trend, it’s hard to get excited about a company that is struggling with demand.

Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.

Operating Margin

PACCAR has been an efficient company over the last five years. It was one of the more profitable businesses in the industrials sector, boasting an average operating margin of 12.1%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Looking at the trend in its profitability, PACCAR’s operating margin rose by 3.9 percentage points over the last five years, as its sales growth gave it operating leverage.

In Q3, PACCAR generated an operating margin profit margin of 17.8%, up 5.4 percentage points year on year. The increase was solid, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

PACCAR’s EPS grew at a remarkable 13.4% compounded annual growth rate over the last five years, higher than its 8.9% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into PACCAR’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, PACCAR’s operating margin expanded by 3.9 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For PACCAR, its two-year annual EPS declines of 19.2% mark a reversal from its (seemingly) healthy five-year trend. We hope PACCAR can return to earnings growth in the future.

In Q3, PACCAR reported EPS of $1.12, down from $1.85 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects PACCAR’s full-year EPS of $5.11 to grow 9%.

Key Takeaways from PACCAR’s Q3 Results

While revenue beat slightly, EPS missed. Overall, this quarter was mixed. Investors were likely hoping for more, and shares traded down 3.1% to $94.41 immediately following the results.

Should you buy the stock or not? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.