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Why Is Wabco (WBC) Down 2.2% Since Last Earnings Report?

Zacks Equity Research

It has been about a month since the last earnings report for Wabco Holdings (WBC). Shares have lost about 2.2% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Wabco due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

WABCO Q1 Earnings & Revenues Hurt by Lower Production

WABCO canceled the first-quarter 2019 earnings call scheduled for Apr 26, 2019, due to the agreement and plan of merger with ZF Friedrichshafen AG. However, the company issued the earnings report in Form 10-Q quarterly. Its earnings were $1.64 per share in the reported quarter, marking a decline from $1.87 recorded in the prior-year quarter. The Zacks Consensus Estimate for earnings was pegged at $1.85.

Reportedly, quarterly sales of WABCO declined 7% to $933 million. This decline resulted from a challenging environment that led to a slump in the global production of new trucks, buses and trailers as well as passenger cars. The Zacks Consensus Estimate for sales was pegged at $972.3 million.

During the reported quarter, gross profit decreased 11.7% year over year to $273 million. Operating expenses rose 3.5% year over year to $167.7 million.

Financial Details

At the end of first-quarter 2019, WABCO had cash and cash equivalents of $603.3 million compared with $503.8 million as of Dec 31, 2018. The company’s long-term debt was $829 million as of Mar 31, 2019, marking a decline from $845 million as of Dec 31, 2018.

At the end of first-quarter 2019, WABCO witnessed net cash inflow of $58.8 million compared with $89 million a year ago.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

Currently, Wabco has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Wabco has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.



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