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Here's Why Wabtec (WAB) Stock Can Grace Your Portfolio
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Wabtec Corporation’s (WAB - Free Report) strong performance in the Freight and Transit segments, driven by increased demand and a robust backlog, is boosting its top line. The company’s efforts to reward its shareholders through dividends and buybacks are also commendable. Owing to the tailwinds, shares of WAB have performed impressively on the bourse. If you have not taken advantage of its share price appreciation yet, it’s time to do so.
Let’s take a look at the factors that make this Zacks Rank #1 (Strong Buy) stock a strong investment pick at the moment.
Robust Price Performance: A glimpse at the company’s price trend reveals that its shares have surged 81.7% in a year compared with the industry‘s 7.6% growth.
Image Source: Zacks Investment Research
Northward Estimate Revision: The Zacks Consensus Estimate for earnings growth has been revised upward by 28.37% over the past 90 days for the current quarter. For the current year, the consensus mark for earnings growth has moved 22.64% north in the same time frame. The favorable estimate revisions indicate brokers’ confidence in the stock.
Impressive Earnings Surprise History: WAB has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average surprise of 11.46%.
Driving Factors: Wabtec’s top line increased 13.8% in the first quarter of 2024 compared with the year-ago quarter, driven by higher sales in both the Freight and Transit segments. While the upsurge in the Freight segment is primarily driven by equipment and services, the transit segment gains from strong aftermarket and original equipment manufacturing sales.
The Company’s multi-year backlog continues to provide strong visibility. WAB exited the first quarter of 2024 with a current ratio (a measure of liquidity) of 1.52. A current ratio of greater than 1 is desirable as it indicates that the company has enough cash to meet its debt obligations. During the quarter, WAB repurchased $175 million of Wabtec shares and paid $36 million in dividends.
Driven by this encouraging backdrop, management raised its current-year revenues and earnings per share guidance. Wabtec now expects sales in the $10.25-$10.55 billion band (prior view: $10.05-$10.35 billion). The Zacks Consensus Estimate for 2024 sales is pegged at $10.36 billion, indicating year-over-year growth of 7.1%.
Adjusted EPS is now estimated between $7.00 and $7.40 (prior view: $6.50-$6.90). The mid-point of $7.20 is below the Zacks Consensus Estimate of earnings of $7.26 per share.
Bullish Industry Rank: The industry to which WAB belongs currently has a Zacks Industry Rank of 56 (250 plus groups). Such a good rank places the company in the top 22% of Zacks Industries. Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.
A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Therefore, reckoning the industry’s performance becomes imperative.
SKYW delivered a trailing four-quarter earnings surprise of 128.1%, on average. Shares of SkyWest have surged 130.9% in the past year.
GATX currently carries a Zacks Rank #2 (Buy) and has an expected earnings growth rate of 7.6% for the current year.
The company has an encouraging track record with respect to earnings surprise, having surpassed the Zacks Consensus Estimate in three of the last four quarters and missed once. The average beat is 7.5%. Shares of GATX have gained 12% in the past year.
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Here's Why Wabtec (WAB) Stock Can Grace Your Portfolio
Wabtec Corporation’s (WAB - Free Report) strong performance in the Freight and Transit segments, driven by increased demand and a robust backlog, is boosting its top line. The company’s efforts to reward its shareholders through dividends and buybacks are also commendable. Owing to the tailwinds, shares of WAB have performed impressively on the bourse. If you have not taken advantage of its share price appreciation yet, it’s time to do so.
Let’s take a look at the factors that make this Zacks Rank #1 (Strong Buy) stock a strong investment pick at the moment.
Robust Price Performance: A glimpse at the company’s price trend reveals that its shares have surged 81.7% in a year compared with the industry‘s 7.6% growth.
Image Source: Zacks Investment Research
Northward Estimate Revision: The Zacks Consensus Estimate for earnings growth has been revised upward by 28.37% over the past 90 days for the current quarter. For the current year, the consensus mark for earnings growth has moved 22.64% north in the same time frame. The favorable estimate revisions indicate brokers’ confidence in the stock.
Impressive Earnings Surprise History: WAB has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average surprise of 11.46%.
Driving Factors: Wabtec’s top line increased 13.8% in the first quarter of 2024 compared with the year-ago quarter, driven by higher sales in both the Freight and Transit segments. While the upsurge in the Freight segment is primarily driven by equipment and services, the transit segment gains from strong aftermarket and original equipment manufacturing sales.
The Company’s multi-year backlog continues to provide strong visibility. WAB exited the first quarter of 2024 with a current ratio (a measure of liquidity) of 1.52. A current ratio of greater than 1 is desirable as it indicates that the company has enough cash to meet its debt obligations. During the quarter, WAB repurchased $175 million of Wabtec shares and paid $36 million in dividends.
Driven by this encouraging backdrop, management raised its current-year revenues and earnings per share guidance. Wabtec now expects sales in the $10.25-$10.55 billion band (prior view: $10.05-$10.35 billion). The Zacks Consensus Estimate for 2024 sales is pegged at $10.36 billion, indicating year-over-year growth of 7.1%.
Adjusted EPS is now estimated between $7.00 and $7.40 (prior view: $6.50-$6.90). The mid-point of $7.20 is below the Zacks Consensus Estimate of earnings of $7.26 per share.
Bullish Industry Rank: The industry to which WAB belongs currently has a Zacks Industry Rank of 56 (250 plus groups). Such a good rank places the company in the top 22% of Zacks Industries. Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.
A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Therefore, reckoning the industry’s performance becomes imperative.
Other Stocks to Consider
Some other top-ranked stocks from the Zacks Transportation sector are SkyWest (SKYW - Free Report) and GATX (GATX - Free Report) .
SkyWest currently sports a Zacks Rank #1 and has an expected earnings growth rate of 784.4% for the current year. You can see the complete list of today’s Zacks #1 Rank stocks here.
SKYW delivered a trailing four-quarter earnings surprise of 128.1%, on average. Shares of SkyWest have surged 130.9% in the past year.
GATX currently carries a Zacks Rank #2 (Buy) and has an expected earnings growth rate of 7.6% for the current year.
The company has an encouraging track record with respect to earnings surprise, having surpassed the Zacks Consensus Estimate in three of the last four quarters and missed once. The average beat is 7.5%. Shares of GATX have gained 12% in the past year.