Where Is PACCAR Finding Its Growth?
In today's world, most companies span several regions and sell across the world. As Foolish colleague Morgan Housel notes, 10 years ago, less than a third of S&P 500 revenue growth came from abroad. Today, that area makes up half of the S&P 500's growth.
And that number is growing. The truth is, investors regularly underestimate how much demand comes from abroad. More importantly, for large, multinational corporations that have already established a presence in their home markets, much of their future growth comes from abroad.
With that in mind, today we're looking at PACCAR (NAS: PCAR) . We'll examine not only where its sales and earnings come from, but how its sales abroad have changed over time.
Where PACCAR's sales were five years ago
Five years ago, PACCAR received a majority 52% of its sales from the United States.
Source: S&P Capital IQ.
Where PACCAR's sales are today
Today, the trend toward international sales driving PACCAR's results keeps growing.
Source: S&P Capital IQ.
It's not just that international sales are growing; they're also picking up the slack while United States sales shrink.
5-Year Sales Growth
While the five-year tale of PACCAR might show a company with modest growth outside the United States and a troubling picture inside the country, that same five-year picture doesn't show the roller-coaster ride the company has been on. PACCAR's sales collapsed throughout 2009, eventually settling at a point where they were just half the sales level reach just three years earlier. Since then, PACCAR has rebounded to a sales level similar to where it was during 2006, but it has been a long ride.
Similar to heavy-equipment peers Deere (NYS: DE) and Caterpillar (NYS: CAT) , PACCAR could be a great play on the improving global economy. I'd previously taken a look at Caterpillar in this series and was stunned at how quickly the company's revenue was shifting away from America and toward growing economies across the globe. Overall, with Cat's prime placement in the construction industry -- versus PACCAR's placement in trucking -- I feel as though Caterpillar offers the most promising long-term opportunity in the space during a prolonged global growth phase. That being said, all of these companies can be extremely cyclical and dangerous if the economy takes a turn for the worse. If you're an investor trying to avoid risky plays, this isn't the space for you.
Keep searching for global opportunities
There's a reason companies are seeing outsized growth around the world; in the past decade emerging market consumer spending grew 250%, leaving the growth rates of the U.S. and Europe in the dust. While cyclical companies are taking advantage of this trend, so are everyday consumer goods products that can weather macro speed bumps and profit for decades to come.
If you're an investor scanning the world for opportunities, look no further than our new report "3 Companies Set to Dominate the World." In the report, Fool analysts select three companies that have an international growth opportunity that's simply stunning. The report is free but won't be available forever, so get your copy by clicking here today!
At the time this article was published Eric Bleeker owns shares of no companies listed above. Motley Fool newsletter services have recommended buying shares of PACCAR. The Motley Fool has a disclosure policy.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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