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Wabtec (WAB) to Post Q1 Earnings: What's in the Offing?

Zacks Equity Research
·4 min read

Westinghouse Air Brake Technologies Corporation, operating as Wabtec Corporation WAB, is scheduled to report first-quarter 2020 results on May 4, before market open.

The company has an impressive earnings history, having outperformed the Zacks Consensus Estimate in all of the last four quarters. It has a trailing four-quarter positive earnings surprise of 11.16%, on average.

The Zacks Consensus Estimate for first-quarter 2020 earnings has been revised downward 1% to 99 cents in the past 60 days.

Let’s see how things have shaped up in the quarter to be reported.

Factors Likely at Play

Escalating operating expenses, primarily due to surge in selling, general and administrative expenses, are likely to get reflected in Wabtec’s first-quarter earnings. This, in turn, might have led to a deterioration in operating ratio (operating expenses as a percentage of revenues) in the soon-to-be-reported quarter. Also, the coronavirus pandemic is likely to have dented revenues in the first quarter.

Westinghouse Air Brake Technologies Corporation Price and EPS Surprise

 

Westinghouse Air Brake Technologies Corporation Price and EPS Surprise
Westinghouse Air Brake Technologies Corporation Price and EPS Surprise

Westinghouse Air Brake Technologies Corporation price-eps-surprise | Westinghouse Air Brake Technologies Corporation Quote

 

However, the company’s first-quarter performance is expected to have been boosted by the GE Transportation merger. The merger is likely to have had a positive impact on net sales in the Transit and Freight segments. Evidently, the Zacks Consensus Estimate for current quarter revenues is pegged at 2.03 billion, which indicates growth of 27.14% year over year.

What Does the Zacks Model Say?

Our proven model does not predict an earnings beat for Wabtec this time around. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Wabtec has an Earnings ESP of -6.60% since the Most Accurate Estimate is pegged at 92 cents, lower than the Zacks Consensus Estimate of 99 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank:  Wabtec carries a Zacks Rank #4 (Sell), currently.

Highlights of Q4 Earnings

In the last reported quarter, Wabtec’s earnings (excluding 33 cents from non-recurring items) of $1.04 per share beat the Zacks Consensus Estimate by a penny. Moreover, the bottom line improved 7.2% year over year. Results were aided by a strong operating performance. Quarterly revenues of $2,368.4 million beat the consensus mark of $2,191.8 million and improved more than 100% on a year-over-year basis.

Stocks to Consider

Investors interested in the Zacks Transportation sector may consider Golar LNG Limited GLNG, Hawaiian Holdings, Inc. HA and Alaska Air Group, Inc. ALK as these stocks have the right combination of elements to beat on earnings in this reporting cycle.

 Golar LNG has an Earnings ESP of +1000.09% and a Zacks Rank #2.

Hawaiian Holdings has an Earnings ESP of +15.21% and a Zacks Rank #3. The company will report first-quarter 2020 earnings on May 5.

Alaska Air has an Earnings ESP of +11.06% and a Zacks Rank of 3. The company will report first-quarter 2020 earnings on May 5.

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