Critical Review: PACCAR (NASDAQ:PCAR) vs. Mercedes-Benz Group (OTCMKTS:MBGYY)

PACCAR (NASDAQ:PCAR) and Mercedes-Benz Group (OTCMKTS:MBGYY) are both large-cap auto/tires/trucks companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, dividends, earnings, risk, analyst recommendations, profitability and valuation.

Risk and Volatility

PACCAR has a beta of 0.96, indicating that its share price is 4% less volatile than the S&P 500. Comparatively, Mercedes-Benz Group has a beta of 1.06, indicating that its share price is 6% more volatile than the S&P 500.

Profitability

This table compares PACCAR and Mercedes-Benz Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PACCAR	12.36%	23.53%	9.89%
Mercedes-Benz Group	6.99%	10.90%	3.84%

Insider and Institutional Ownership

64.9% of PACCAR shares are held by institutional investors. 2.0% of PACCAR shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and price targets for PACCAR and Mercedes-Benz Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PACCAR	1	8	4	1	2.36
Mercedes-Benz Group	0	5	0	0	2.00

PACCAR presently has a consensus target price of $104.14, suggesting a potential upside of 13.48%. Given PACCAR’s stronger consensus rating and higher possible upside, analysts plainly believe PACCAR is more favorable than Mercedes-Benz Group.

Earnings & Valuation

This table compares PACCAR and Mercedes-Benz Group”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PACCAR	$32.36 billion	1.49	$4.16 billion	$6.60	13.90
Mercedes-Benz Group	$157.56 billion	0.36	$15.43 billion	C$3.81	3.84

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

Dividends

PACCAR pays an annual dividend of $1.32 per share and has a dividend yield of 1.4%. Mercedes-Benz Group pays an annual dividend of C$0.80 per share and has a dividend yield of 5.5%. PACCAR pays out 20.0% of its earnings in the form of a dividend. Mercedes-Benz Group pays out 21.0% 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. PACCAR has raised its dividend for 5 consecutive years.

Summary

PACCAR beats Mercedes-Benz Group on 14 of the 18 factors compared between the two stocks.

About PACCAR

PACCAR Inc designs, manufactures, and distributes light, medium, and heavy-duty commercial trucks in the United States, Canada, Europe, Mexico, South America, Australia, and internationally. It operates through three segments: Truck, Parts, and Financial Services. The Truck segment designs, manufactures, and distributes trucks for the over-the-road and off-highway hauling of commercial and consumer goods. It 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, as well as provides finance and leasing products and services to customers and dealers. This segment also offers 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 owners/operators and other businesses; and truck inventory financing services to independent dealers. In addition, this segment offers loans and leases directly to customers for the acquisition of trucks and related equipment. The company also manufactures and markets industrial winches under the Braden, Carco, and Gearmatic nameplates. PACCAR Inc was founded in 1905 and is headquartered in Bellevue, Washington.

About Mercedes-Benz Group

Mercedes-Benz Group AG operates as an automotive company in Germany and internationally. It operates through Mercedes-Benz Cars, Mercedes-Benz Vans, and Mercedes-Benz Mobility segments. The company develops, manufactures, and sells cars and vans under the Mercedes-Benz, Mercedes-AMG, Mercedes-Maybach, G-Class brands, as well as related spare parts and accessories. It also provides financing, leasing, car subscription and rental, fleet management, insurance brokerage, and mobility services, as well as digital services for charging and payment. The company was formerly known as Daimler AG and changed its name to Mercedes-Benz Group AG in February 2022. Mercedes-Benz Group AG was founded in 1886 and is headquartered in Stuttgart, Germany.