Using an unlevered Free Cash Flow to Firm (FCFF) model, we project PACCAR Inc's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -0.2% to 4.9% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 174, DPO 54, DIO 34). At a 8.9% WACC with mid-year discounting, the terminal value (103% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 22.6x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $204.43 per share, suggesting PCAR is undervalued by 77.1% at the current price of $115.42.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 4,196 | 4,598 | 4,859 | 4,793 | 5,026 | 5,152 |
| (−) Net Interest | 76 | 84 | 88 | 87 | 91 | 94 |
| (+) D&A | 1,484 | 1,446 | 1,484 | 1,566 | 1,547 | 1,585 |
| EBITDA | 5,756 | 6,127 | 6,432 | 6,446 | 6,664 | 6,830 |
| (−) Tax | 905 | 991 | 1,048 | 1,033 | 1,084 | — |
| (−) CapEx | 1,444 | 1,582 | 1,672 | 1,649 | 1,729 | — |
| (−) ΔWC | 15,996 | 1,174 | 765 | -194 | 682 | — |
| Free Cash Flow (FCF) | -12,589 | 2,380 | 2,947 | 3,958 | 3,169 | — |
| Peers' EBITDA Multiple | 22.6x | |||||
| Terminal Value | 154,709 | |||||
| WACC / Discount Rate | 8.91% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | -12,063 | 2,094 | 2,381 | 2,936 | 2,158 | 100,948 |
| Enterprise Value | 98,453 | |||||
| Projection Period | -2,494 | -2.5% | ||||
| Terminal Value | 100,948 | 102.5% | ||||
| (−) Current Net Debt | (9,254) | |||||
| Equity Value | 107,707 | |||||
| (÷) Outstanding Shares | 527M | |||||
| Fair Price | $204 | +77.1% | ||||
| WACC \ EV/EBITDA Exit Multiple | 18.6x | 20.6x | 22.6x | 24.6x | 26.6x |
|---|---|---|---|---|---|
| 6.9% | $187 | $205 | $224 | $242 | $261 |
| 7.9% | $178 | $196 | $214 | $232 | $249 |
| 8.9% | $171 | $188 | $204 | $221 | $238 |
| 9.9% | $163 | $179 | $195 | $212 | $228 |
| 10.9% | $156 | $172 | $187 | $202 | $218 |
Current price: $115.42. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.