6 Reasons Why You Should Add Wabtec (WAB) to Your Portfolio
Westinghouse Air Brake Technologies Corporation’s, operating as Wabtec Corporation (WAB), topline is benefiting from strength across its Freight segment. Improved guidance for 2023 looks encouraging and raises optimism about the stock.
Against this backdrop, let’s look at the factors that make this stock an attractive pick.
What Makes WAB an Attractive Pick?
An Outperformer: A glimpse at the company’s price trend reveals that the stock has had an impressive run on the bourse in the past six months. Shares of WAB have gained 23.6% in the said time frame, outperforming the 17.6% increase of the industry it belongs to.
Image Source: Zacks Investment Research
Solid Zacks Rank: WAB has a Zacks Rank #2 (Buy). Our research shows that stocks with a Zacks Rank #1 (Strong Buy) or 2 offer the best investment opportunities. Thus, the company is a compelling investment proposition at the moment.
Northward Estimate Revisions:The direction of estimate revisions serves as an important pointer when it comes to the price of a stock. Over the past 90 days, the Zacks Consensus Estimate for WAB’s fourth-quarter 2023 earnings has moved up 1.3% year over year. Over the past 90 days, the Zacks Consensus Estimate for WAB’s 2023 and 2024 earnings has increased 5.1% and 3.9%, year over year, respectively.
Positive Earnings Surprise History: WAB has an impressive earnings surprise history, having outperformed the Zacks Consensus Estimate in three of the preceding four quarters (met the same in the remaining quarter). The average beat is 7.11%.
Earnings Expectations: Earnings growth and stock price gains often indicate a company’s prospects. For fourth-quarter 2023, WAB’s earnings are expected to grow 18.46% year over year. For 2023 and 2024, WAB’s earnings are expected to grow 22.02% and 10.03%, year over year, respectively.
Growth Factors: Wabtec’s top-line performance (up 18.1% year over year in the first nine months of 2023) continues to gain from solid growth across its Freight segment revenues (up 18.9% year over year in the same time frame). Segmental growth was backed by strength across all product lines, with solid growth in Equipment, Digital Electronics and Services.
Management has raised Wabtec’s 2023 guidance. For 2023, it now expects sales of $9.50-$9.70 billion (prior view: $9.25-$9.50 billion). Adjusted earnings per share are now estimated to be between $5.80 and $6.00 (prior view: $5.50 and $5.80). Management still anticipates strong cash flow generation, with operating cash flow conversion exceeding 90%.
Other Stocks to Consider
Some other top-ranked stocks from the Zacks Transportation ZTO Express ZTO and SkyWest, Inc. SKYW. Each stock presently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
ZTO Express has an expected earnings growth rate of 26.02% for the current year. ZTO delivered a trailing four-quarter earnings surprise of 17.31%, on average.
The Zacks Consensus Estimate for ZTO’s current-year earnings has improved 4% over the past 90 days. Shares of ZTO have declined 17% year to date.
SkyWest's fleet-modernization efforts are commendable. The Zacks Consensus Estimate for SKYW’s current-year earnings has improved 31.5% over the past 90 days. Shares of SKYW have surged 181.3% year to date.
SKYW delivered a trailing four-quarter earnings surprise of 32.57%, on average.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
SkyWest, Inc. (SKYW) : Free Stock Analysis Report
Westinghouse Air Brake Technologies Corporation (WAB) : Free Stock Analysis Report
ZTO Express (Cayman) Inc. (ZTO) : Free Stock Analysis Report
