U.S. Markets close in 22 mins

Why Wabash National Stock Popped Nearly 10%

Rich Smith, The Motley Fool

What happened

Wabash National (NYSE: WNC) makes the back end of trucking companies' ubiquitous tractor-trailers -- the trailers. It's not the sexiest business, but Wabash proved it can be a very profitable business when it reported its Q4 earnings last night.

How profitable is the business of trailer-making? Profitable enough to propel Wabash National stock up 9.5% by the close of trading Wednesday, after investors saw the results. For the fiscal fourth quarter, Wabash earned $0.80 per diluted share ($0.36 pro forma). By either measure, the company beat Wall Street estimates, which had fixed on $0.34 as Wabash's likely profit.

Tractor trailer driving into sunrise

Image source: Getty Images.

So what

Wabash's $0.80-per-share Q4 profit was more than twice the $0.36 the company had earned one year ago. The strong finish lifted the company to $1.78 in earnings per share for the year, nearly matching 2016's performance, and making 2017 Wabash's second most profitable year in the past five years -- even as 2017 was Wabash's second worst  year of the past five for revenue (down 4% from 2016).

Now what

Despite the strong net profit, operating profit margins at Wabash were rather weak last year -- just 7.4%. Nevertheless, Wabash management is forecasting that 2018 will be a good year. Sales are expected to grow as much as 19% to about $2.1 billion. Earnings should range from $1.86 to $2.02 per diluted share. Thus, even at the low end of guidance, this would represent modest 4% earnings growth -- and make 2018 the company's most profitable year in the past five.

More From The Motley Fool

Rich Smith owns shares of Wabash National. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.