PCAR vs. NAV: Navistar Doesn’t Look Cheap
- Adjusted EV: Below, we update our table comparing Navistar and Paccar on an adjusted EV/EBITDA basis (2013 Consensus) and again find that Navistar is actually more expensive than Paccar. While we generally do not rely on multiples for valuation, the comparison is telling.
- Operational Risks: Navistar has numerous operating and management challenges ahead that will bring tremendous operating risks. Why pay more for Navistar than Paccar?
- Downside Risk Significant: If Navistar cannot pull off a rapid and challenging switch in engine emissions technology, the shares could easily end up in the single digits. That still doesn’t seem like a risk worth taking to us, even with the shares down 43.4% YTD.
UPCOMING EVENT: We will be hosting a call on our Truck OEM Industry Black Book on August 16th at 11am. Details to follow.
