Solid 2Q26 Driven by US/CAN Truck Unit Sales Bolsters Conviction in Truck Cycle: PACCAR Inc | North America

Research evidence excerpt

Solid 2Q26 Driven by US/CAN Truck Unit Sales Bolsters Conviction in Truck Cycle: PACCAR Inc | North America

UpdateMValuation Methodology and Risks

Allison Transmission Holdings Inc (ALSN.N)

~13x 2026 EPS of $10.02, approximately in-line with current shares' recent valuation and at

the top end of their historical range to reflect troughing truck markets.

Risks to Upside

n Market share gains outside of NA exceed expectations

n Vocational and MD truck demand is better than expected

Risks to Downside

n Market share gains in markets outside of NA fail to materialize

n Vocational and MD truck build rates remain lower than expected

Cummins Inc (CMI.N)

~25x P/E multiple on base case EPS, reflecting a re-rating higher than historical 11-18x due to

a near-trough truck segment (peak multiple) plus secular trends in its powering AI segments

(Power Systems, Distribution)

n On-hwy vehicle orders exceed expectations

n Prime power investment and additional backup generator capacity announcements

n Power Systems orders and throughput

n Reduced earnings drag from Accelera

n Prolonged truck recovery in 2026

n Further changes to 2027 emissions regulations creating uncertainty

n OEM vertical integration accelerates

n Off-hwy vehicle markets disappoint

PACCAR Inc (PCAR.O)

~21x P/E multiple on 2026 base case EPS of $5.39, reflect a peak on trough multiple that is

above its LT average of 14.5x

n 2026 truck builds and deliveries exceed expectations

n Trucker profitability rebounds on stronger economic/freight activity

n PCAR gains share, driving above industry returns

n Trucker profitability and freight volume deteriorate further

n 2027 emissions regulations enforcement delayed, resulting weaker than expected

demand in 2026

Morgan Stanley Research 3