PACCAR is heavily dominated by institutional owners

To get a sense of who is truly in control of PACCAR Inc, it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 66% to be precise, is institutions. Put another way, the group faces the maximum upside potential (or downside risk).

Since institutional have access to huge amounts of capital, their market moves tend to receive a lot of scrutiny by retail or individual investors. Hence, having a considerable amount of institutional money invested in a company is often regarded as a desirable trait.

What Does The Institutional Ownership Tell Us About PACCAR?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

As you can see, institutional investors have a fair amount of stake in PACCAR. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of PACCAR, (below). Of course, keep in mind that there are other factors to consider, too.

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. Hedge funds don’t have many shares in PACCAR. The Vanguard Group, Inc. is currently the largest shareholder, with 11% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 7.2% and 4.1%, of the shares outstanding, respectively.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock’s expected performance. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of PACCAR

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our most recent data indicates that insiders own some shares in PACCAR Inc. It is a very large company, and board members collectively own US$457m worth of shares (at current prices). Most would say this shows a good alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

With a 32% ownership, the general public, mostly comprising of individual investors, have some degree of sway over PACCAR. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Paccar achieves record annual revenues and net income

“Paccar reported record annual revenues and net income in 2022,” said Preston Feight, chief executive officer. “Paccar’s excellent results reflect the strong demand for premium quality DAF, Peterbilt and Kenworth new truck models worldwide, record aftermarket parts profits and strong financial services performance. I am very proud of our employees and dealers who have delivered outstanding trucks and transportation solutions to our customers.”

Paccar achieved quarterly revenues of $8.13 billion in the fourth quarter of 2022, compared to the $6.69 billion reported in the same period in 2021. The company earned $921.3 million ($2.64 per diluted share) in the fourth quarter of 2022, 78% higher than the $518.7 million ($1.49 per diluted share) earned in the fourth quarter of 2021. Paccar achieved revenues of $28.82 billion in 2022, compared to revenues of $23.52 billion in 2021. The company earned $3.01 billion ($8.63 per diluted share) in 2022, compared to $1.87 billion ($5.35 per diluted share) earned in 2021.

“Paccar is manufacturing the most comprehensive new truck range in its history, including new DAF XG+, XG, XF and XD heavy trucks which were named International Truck of the Year, new Peterbilt 579 and Kenworth T680 heavy-duty trucks that feature major aerodynamic and technology enhancements, and new Kenworth and Peterbilt medium-duty trucks. These vehicles deliver premium quality, excellent fuel efficiency and low operating costs for our customers. Paccar is also investing in the next generation of products and technologies to further enhance customers’ operating efficiency. These investments include Kenworth, Peterbilt and DAF battery electric trucks, hydrogen internal combustion and fuel cell powertrains, enhanced Paccar Connect telematics solutions, and ongoing development of the Paccar Autonomous Vehicle Platform,” added Feight.

Paccar declared cash dividends of $4.19 per share during 2022. This included a $2.80 per share extra cash dividend paid on January 5, 2023. Paccar also declared a 50% stock dividend in December and will issue the new shares on February 7, 2023, after which the regular quarterly cash dividend will be increased to $.25 per share. “Paccar has generated excellent shareholder returns and annual net income due to its industry-leading premium quality vehicles, strong growth of its aftermarket parts and financial services, and innovative use of technology,” shared Mark Pigott, executive chairman. Paccar delivered a total shareholder return of 17.1%, including regular quarterly and extra cash dividends paid, in 2022.