Is PACCAR Inc (PCAR) overvalued?
On Equity Rank's model estimate, PCAR trades close to its fair value (4% below it). PACCAR Inc (PCAR) last closed at $101.98; the multi-method model fair value is $106.46.
| Price | Model fair value | Price vs model |
|---|---|---|
| $101.98 | $106.46 | 4% below |
What the answer rests on
- 4 of 12 valuation methods put PCAR's value above its price and 8 put it below, so the methods disagree.
- To justify today's price, PCAR's free cash flow would need to grow about 4.8% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 22.8% a year.
- PCAR trades at 19.5 times its last year's earnings, against a median of 29.0 for 11 profitable Heavy Machinery companies.
- Over the past year the price sat below the model fair value on 6% of trading days. The gap ranged from 6% below to 55% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind PCAR's fair value · What prices assume · Other companies