We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Wabtec (WAB) Up 2.6% Since Last Earnings Report: Can It Continue?
Read MoreHide Full Article
It has been about a month since the last earnings report for Westinghouse Air Brake Technologies (WAB - Free Report) . Shares have added about 2.6% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Wabtec due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Wabtec Q2 Earnings Surpass Estimates
Wabtec reported second-quarter 2024 earnings (excluding 32 cents from non-recurring items) of $1.96 per share, which surpassed the Zacks Consensus Estimate of $1.85. The bottom line improved 39% year over year due to higher sales.
Revenues of $2.64 billion beat the Zacks Consensus Estimate of $2.62 billion. The top line grew 9.85% year over year due to higher sales of the Freight and Transit segments.
Total operating expenses in the reported quarter increased by $33 million to $444 million. The operating ratio (operating expenses as a percentage of revenues) improved to 16.8% from the year-ago quarter figure of 17.1%. A lower value of the metric is preferable.
The adjusted operating margin increased 1.6 points to 12.7%. The operating margin benefited from higher sales.
During the June quarter, WAB generated cash from operations of $235 million compared with $115 million a year ago. The improvement was due to higher net income and improved working capital.
Wabtec exited the quarter with cash, cash equivalents and restricted cash of $595 million and a total debt of $4 billion. In the second quarter of 2024, WAB’s total available liquidity was $2.09 billion. The company repurchased shares worth $200 million in the June quarter, apart from paying dividends worth $35 million.
Segmental Highlights
Freight net sales of $1.92 billion exceeded our expectations of $1.86 billion. Results were boosted by the strong performance of Equipment and Components. Freight operating margin increased to 24.1% from 20.3% in the second quarter of 2023.
In the Transit segment, net sales grew 2% year over year to $724 million due to strong aftermarket sales. The actual segmental sales figure was lower than our projection of $725 million. The segmental adjusted operating margin decreased to 12.7% from 11.1% in the second quarter of 2023.
2024 Guidance
Wabtec tweaked its 2024 adjusted EPS guidance to the range of $7.20-$7.50. The earlier guidance was in the $7.00-$7.40 range.
Wabtec’s revenue guidance remains unchanged in the $10.25 billion-$10.55 billion band. For the full year 2024, Management expects operating cash flow conversion of greater than 90 percent.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
Currently, Wabtec has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Wabtec has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Wabtec (WAB) Up 2.6% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Westinghouse Air Brake Technologies (WAB - Free Report) . Shares have added about 2.6% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Wabtec due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Wabtec Q2 Earnings Surpass Estimates
Wabtec reported second-quarter 2024 earnings (excluding 32 cents from non-recurring items) of $1.96 per share, which surpassed the Zacks Consensus Estimate of $1.85. The bottom line improved 39% year over year due to higher sales.
Revenues of $2.64 billion beat the Zacks Consensus Estimate of $2.62 billion. The top line grew 9.85% year over year due to higher sales of the Freight and Transit segments.
Total operating expenses in the reported quarter increased by $33 million to $444 million. The operating ratio (operating expenses as a percentage of revenues) improved to 16.8% from the year-ago quarter figure of 17.1%. A lower value of the metric is preferable.
The adjusted operating margin increased 1.6 points to 12.7%. The operating margin benefited from higher sales.
During the June quarter, WAB generated cash from operations of $235 million compared with $115 million a year ago. The improvement was due to higher net income and improved working capital.
Wabtec exited the quarter with cash, cash equivalents and restricted cash of $595 million and a total debt of $4 billion. In the second quarter of 2024, WAB’s total available liquidity was $2.09 billion. The company repurchased shares worth $200 million in the June quarter, apart from paying dividends worth $35 million.
Segmental Highlights
Freight net sales of $1.92 billion exceeded our expectations of $1.86 billion. Results were boosted by the strong performance of Equipment and Components. Freight operating margin increased to 24.1% from 20.3% in the second quarter of 2023.
In the Transit segment, net sales grew 2% year over year to $724 million due to strong aftermarket sales. The actual segmental sales figure was lower than our projection of $725 million. The segmental adjusted operating margin decreased to 12.7% from 11.1% in the second quarter of 2023.
2024 Guidance
Wabtec tweaked its 2024 adjusted EPS guidance to the range of $7.20-$7.50. The earlier guidance was in the $7.00-$7.40 range.
Wabtec’s revenue guidance remains unchanged in the $10.25 billion-$10.55 billion band. For the full year 2024, Management expects operating cash flow conversion of greater than 90 percent.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
Currently, Wabtec has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Wabtec has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.