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Wabtec Rises 29.9% YTD: More Upside Ahead for the Stock?

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Westinghouse Air Brake Technologies Corporation (WAB - Free Report) ,or Wabtec, shares have rallied 29.9% on a year-to-date basis compared with the industry’s 5.9% decline. The S&P 500 composite index rose 17.9% in the same time frame, while the Zacks Transportation sector gained 1.8%. The U.S.-based company currently has a market capitalization of $28.95 billion.

Wabtec, presently sporting a Zacks Rank #1 (Strong Buy), boasts an impressive track record of beating estimates in each of the trailing four quarters, the average surprise being 11.8%.

YTD Price Performance

Zacks Investment Research
Image Source: Zacks Investment Research

Can WAB Retain the Momentum?

The Zacks Consensus Estimate for WAB’s 2024 earnings is pegged at $1.86 per share, which indicates an improvement of 9.4% from 2023’s actuals. The same for revenues stands at $2.64 billion, which implies a 3.7% increase from the prior year's actual.

The consensus mark for 2025 earnings is pegged at $8.30 per share, which indicates 11.3% growth from 2024 estimates. The same for revenues is pegged at $10.82 billion, which indicates a rise of 4.2% from 2024 estimates. Wabtec’s top line is benefiting from higher sales across its Freight and Transit segments. While the Freight segment benefits from growth in services and components, the Transit segment gains from strong aftermarket and original equipment manufacturing sales.

Wabtec posted a significant year-over-year increase (9.85%) in revenues for 2023. The surge in the top line was driven by a 13% rise in Freight revenues (accounting for 72.6% of the top line). The ongoing summer season is expected to provide a further boost to revenues.

WAB’s liquidity position is encouraging. The airline ended the second quarter of 2024 with cash and cash equivalents of $595 million, much higher than the current debt level of $503 million. This implies that the company has sufficient cash to meet its current debt obligations. Wabtec’s times interest earned ratio of 7.4 compares favorably with the industry’s ratio of 3.2.

With WAB’s health tied to the economy, we believe that the company will remain in good shape going forward as the economy has normalized after the pandemic. Sales should continue improving, given the uptick in the trading scenario.

Despite the abovementioned upsides, one must be mindful of high fuel and labor costs, which pose major challenges for WAB.

Other Stocks to Consider

Some other top-ranked stocks for investors’ consideration in the Zacks Transportation sector include C.H. Robinson Worldwide (CHRW - Free Report) and ZIM Integrated Shipping Services (ZIM - Free Report) .

C.H. Robinson Worldwide currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here. CHRW has an expected earnings growth rate of 25.2% for the current year.

The company 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 7.3%. Shares of CHRW have risen 9.8% in the past year.

ZIM also sports a Zacks Rank #1 at present and has an expected earnings growth rate of 257.2% for the current year.

Shares of ZIM have climbed 63.8% in the past year.

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