U.S. Markets closed
  • S&P 500

    3,699.12
    +32.40 (+0.88%)
     
  • Dow 30

    30,218.26
    +248.74 (+0.83%)
     
  • Nasdaq

    12,464.23
    +87.05 (+0.70%)
     
  • Russell 2000

    1,892.45
    +43.75 (+2.37%)
     
  • Crude Oil

    46.09
    +0.45 (+0.99%)
     
  • Gold

    1,837.70
    +0.90 (+0.05%)
     
  • Silver

    24.32
    +0.18 (+0.76%)
     
  • EUR/USD

    1.2127
    -0.0022 (-0.1819%)
     
  • 10-Yr Bond

    0.9690
    +0.0490 (+5.33%)
     
  • Vix

    20.79
    -0.49 (-2.30%)
     
  • GBP/USD

    1.3438
    -0.0015 (-0.1088%)
     
  • USD/JPY

    104.1400
    +0.2800 (+0.2696%)
     
  • BTC-USD

    19,104.97
    +40.95 (+0.21%)
     
  • CMC Crypto 200

    365.19
    -14.05 (-3.71%)
     
  • FTSE 100

    6,550.23
    +59.96 (+0.92%)
     
  • Nikkei 225

    26,751.24
    -58.13 (-0.22%)
     

Wabtec (WAB) Q1 Earnings Fall Short of Estimates, Drop Y/Y

Zacks Equity Research
·4 min read

Westinghouse Air Brake Technologies Corporation, which operates as Wabtec Corporation WAB, reported first-quarter 2020 earnings (excluding 39 cents from non-recurring items) of 97 cents per share, fallingshort of the Zacks Consensus Estimate by a couple of cents. Moreover, the bottom line declined 8.5% year over year due to higher operating expenses.

Also, total sales jumped 21.1% year over year to $1,929.9 million but missed the Zacks Consensus Estimate of $2,026.2 million. Thisyear-over-year increase in sales was owing to the inclusion of GE Transportation products. We remind investors that Wabtec’s merger with GE Transportation was completed in February 2019. Following this transaction, the company was included in the coveted S&P 500 Index.

Total operating expenses in the reported quarter escalated 12.3% to $448.8 million, despite a 6.3% reduction in selling, general and administrative expenses. Also, the operating ratio (operating expenses as a percentage of revenues) improved to 18.7% from 20.2% in the prior-year period owing to higher revenues. Notably, lower the value of the metric the better.

Due to the coronavirus-induced uncertainty, the company withdrew its previously announced financial guidance for 2020.

Segmental Highlights

At the Transit segment, net sales decreased 7.3 % to $628.9 million. Results were hurt by an organic sales decline of $34 million and unfavorable currency translations. The coronavirus-induced supply-chain disruptions also hurt segmental sales. Segmental operating margin (income from operations as a percentage of sales) increased to 10.9% from 8.8% in the year-ago quarter.

Freight net sales surged 42% to $1,301 million despite organic sales decrease and adverse foreign currency movements. Segmental results were boosted by sales from acquisitions worth$506 million. Segmental operating margin improved to 12.4% from 8.8% in the year-ago quarter.

Balance Sheet Data

As of Mar 31, 2020, Wabtec, carrying a Zacks Rank #4 (Sell), had $615.9 million in cash and cash equivalents compared with $604.2 million at the end of 2019. Long-term debt at the quarter-end was $4,655.1 million compared with $4,333.6 million at 2019 end.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Performance of Other Transportation Stocks

Wabtec apart, other companies having already reported within the broader Transportation sector include Delta Air Lines DAL, CSX Corporation CSX and Union Pacific Corporation UNP.

Delta incurred a loss of 51 cents (excluding 33 cents from non-recurring items) in the March quarter, narrower than the Zacks Consensus Estimate of a loss of 72 cents. In the year-ago quarter, the company reported earnings (on an adjusted basis) of 96 cents per share. Total revenues of $8,592 million lagged the Zacks Consensus Estimate of $9,637.5 million and also declined 18% year over year.

CSX delivered first-quarter 2020 earnings of $1 per share, beating the Zacks Consensus Estimate of 92 cents. However, the bottom line slipped approximately 2% year over year on a 5% drop in revenues. Total revenues of $2,855 million missed the consensus estimate of $2,877 million due to lower coal and other revenues.

Union Pacific’s first-quarter 2020 earnings of $2.15 per share surpassed the Zacks Consensus Estimate of $1.86. Operating revenues of $5,229 million also beat the consensus mark of $5,105.9 million. While the bottom line improved 11.4% on a year-over-year basis, primarily owing to low costs, the top line dipped 3% due to sluggish freight revenues (down 3%).

 

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>


 


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
 
Union Pacific Corporation (UNP) : Free Stock Analysis Report
 
CSX Corporation (CSX) : Free Stock Analysis Report
 
Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
 
Westinghouse Air Brake Technologies Corporation (WAB) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research