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WABCO's Revenues Gain From Business Contracts & Acquisitions

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On Jun 22, we issued a research report on WABCO Holdings Inc. WBC.

The company has been gaining business contracts from new as well as existing customers, driving revenues along with expanding its business. Between April 2017 and March 2018, WABCO added approximately $745 million business contracts in its portfolio, out of which, contracts worth $502 million are earmarked from 2018 through the end of 2022.

Furthermore, WABCO is focusing on acquisitions to strengthen its footprint in America and other markets. In first-quarter 2018, acquisitions contributed 9.6% in its earnings per share of $1.97. In October 2017, the company acquired the full ownership of Meritor WABCO joint venture to combine all of its North American operations under one brand. Later, in April 2018, it announced the location of its American headquarter in Auburn Hills, MI. These initiatives by WABCO display its commitment to expand its presence in North America.

Wabco Holdings Inc. Price and Consensus

Wabco Holdings Inc. Price and Consensus | Wabco Holdings Inc. Quote

The rising number of contracts, favorable economic environment, and GDP growth in Europe and the United States has encouraged the company to upgrade its outlook for full-year 2018. For 2018, WABCO anticipates net sales of $3.9-$4 billion against the prior expectation of $3.8-$3.9 billion. Moreover, performance diluted earnings per share are expected to be $7.3-$7.8 against the previous guidance of $7.2-$7.7.

In first-quarter 2018, the company witnessed a year-over-year increase in adjusted earnings and revenues. Moreover, both the figures surpassed their respective Zacks Consensus Estimate.

Further, a strong cash flow and healthy balance sheet enable WABCO to engage in share buyback programs and return private funding. In the first quarter, the company invested $31 million to repurchase common shares. Also, in 2018, it aims to buy back shares worth up to $300 million.

Price Performance

Over a month, WABCO’s stock has moved down 2.8%, underperforming 1.2% increase of the industry it belongs to.

Zacks Rank & Other Stocks to Consider

Currently, WABCO has a Zacks Rank #2 (Buy). Other top-ranked stocks in the auto space are Allison Transmission Holdings, Inc. ALSN, Oshkosh Corporation OSK and Toyota Motor Corporation TM. Allison Transmission and Oshkosh sport a Zacks Rank #1 (Strong Buy) while Toyota carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Allison Transmission has an expected long-term growth rate of 10%. Shares of the company have risen 11% over the past year.

Oshkosh has an expected long-term growth rate of 18.3%. Shares of the company have risen 5.6% over the past year.

Toyota has an expected long-term growth rate of 5.7%. Shares of the company have risen 30% over the past year.

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