PCAR - PACCAR is viewed cautiously by BofA after dividend announcement

PACCAR ( NASDAQ: PCAR ) shook things up for investors on Tuesday with an announcement of a stock dividend and increase in its quarterly dividend payout.

Bank of America estimated the new capital allocation from PACCAR yields a ~50% payout ratio, which is said to be broadly in line with the range the last few years. The firm said the special dividend is a testament to PCAR’s strong growth in 2022 and visibility into 2023 given the strong backlog

BofA still has an Underperform rating on PCAR on its view the market is trying to assess the sustainability of the robust truck orders in recent months in relation to the weaker macro data points.

"Industry contacts point to a few factors that explain the unusual equipment cycle - years of under production (COVID, semi-conductor, supply shortages) have aged the fleet, demand for more fuel efficient vehicles, strong demand for parts/services and closed order books are now opening up are unleashing pent up demand."

On the other side of the ledger, the Seeking Alpha Quant Rating on PCAR is flashing Strong Buy. Read a recent breakdown on PACCAR and other industrial stocks from Seeking Alpha's Steven Cress.

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