Comparing Paccar (PCAR) and Ferrari (RACE)

Paccar (NASDAQ: PCAR) and Ferrari (NYSE:RACE) are both large-cap auto/tires/trucks companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, valuation, dividends, profitability, earnings, institutional ownership and risk.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Paccar and Ferrari, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Paccar 2 13 5 0 2.15
Ferrari 1 4 5 0 2.40

Paccar presently has a consensus price target of $74.61, indicating a potential upside of 16.96%. Ferrari has a consensus price target of $126.71, indicating a potential downside of 6.86%. Given Paccar’s higher probable upside, equities research analysts clearly believe Paccar is more favorable than Ferrari.

Risk and Volatility

Paccar has a beta of 1.24, meaning that its share price is 24% more volatile than the S&P 500. Comparatively, Ferrari has a beta of 1.39, meaning that its share price is 39% more volatile than the S&P 500.

Insider & Institutional Ownership

64.3% of Paccar shares are owned by institutional investors. Comparatively, 32.5% of Ferrari shares are owned by institutional investors. 2.6% of Paccar shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

Paccar pays an annual dividend of $1.00 per share and has a dividend yield of 1.6%. Ferrari pays an annual dividend of $0.68 per share and has a dividend yield of 0.5%. Paccar pays out 23.5% of its earnings in the form of a dividend. Ferrari pays out 21.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Profitability

This table compares Paccar and Ferrari’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Paccar 8.99% 21.26% 7.38%
Ferrari 16.44% 79.32% 13.77%

Valuation & Earnings

This table compares Paccar and Ferrari’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Paccar $19.46 billion 1.15 $1.68 billion $4.26 14.97
Ferrari $3.86 billion 6.66 $605.15 million $3.19 42.65

Paccar has higher revenue and earnings than Ferrari. Paccar is trading at a lower price-to-earnings ratio than Ferrari, indicating that it is currently the more affordable of the two stocks.

Summary

Ferrari beats Paccar on 8 of the 15 factors compared between the two stocks.

Paccar Company Profile

PACCAR Inc designs, manufactures, and distributes light, medium, and heavy-duty commercial trucks in the United States, Europe, and internationally. It operates in three segments: Truck, Parts, and Financial Services. The Truck segment offers trucks that are used for the over-the-road and off-highway hauling of commercial and consumer goods. This segment sells its trucks through a network of independent dealers under the Kenworth, Peterbilt, and DAF nameplates. The Parts segment distributes aftermarket parts for trucks and related commercial vehicles. The Financial Services segment conducts full service leasing operations under the PacLease trade name. This segment also provides equipment financing and administrative support services for its franchisees; retail loan and leasing services for small, medium, and large commercial trucking companies, as well as independent owner/operators and other businesses; and truck inventory financing services to independent dealers. In addition, it offers loans and leases directly to customers for the acquisition of trucks and related equipment. The company also manufactures and sells industrial winches under the Braden, Carco, and Gearmatic nameplates. PACCAR Inc was founded in 1905 and is headquartered in Bellevue, Washington.

Ferrari Company Profile

Ferrari N.V., through with its subsidiaries, designs, engineers, produces, and sells luxury performance sports cars. The company offers sports cars, GT cars, special series cars, limited edition supercars, limited editions series, and one-off cars; and open air roadsters and two-seater mid-rear-engined roadsters. It also provides non-registered racing cars; and parts, as well as after sales, repair, maintenance, and restoration services for cars. In addition, the company licenses its Ferrari brand to various producers and retailers of luxury and lifestyle goods; and Ferrari World, a theme park in Abu Dhabi, the United Arab Emirates. Further, it offers non-registered racing cars; and parts, as well as after sales, repair, maintenance, and restoration services for cars. Additionally, the company provides direct or indirect finance and leasing services to retail clients and dealers; and manages race tracks, as well as owns and manages two museums in Maranello and Modena, Italy. As of December 31, 2017, it had a total of 48 retail Ferrari stores, including 30 franchised stores and 18 owned stores. The company also sells its products through a network of 164 authorized dealers operating 185 points of sale worldwide, as well as through its Website, store.ferrari.com. The company was founded in 1947 and is headquartered in Maranello, Italy.

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