Wabtec Corporation

Wabtec Corporation (WAB - Snapshot Report) has been soaring past the broader market and turned in record results in the second quarter. Analysts have been boosting earnings estimates and expect year-over-year growth of 20% in 2008.

Company Description

Wabtec Corporation is one of North America's largest providers of value-added, technology-based products and services for the rail industry. Through its subsidiaries, the company manufactures a full range of products for locomotives, freight cars and passenger transit vehicles. The company also builds new locomotives up to 4,000 horsepower and provides aftermarket services, including locomotive and freight car fleet maintenance.

A Recent Acquisition

The company recently signed a definitive agreement to acquire Standard Car Truck, a leading rail equipment supplier, for cash of about $300 million. Wabtec said Standard Car Truck, which is based in Park Ridge, IL, has annual sales of about $225 million and manufactures engineered components for locomotives and freight cars.

Growth Through Expansion

In early August, Wabtec announced that it expanded its presence in South Africa by establishing joint ventures to manufacture, supply and service its broad range of products in the region.

“Wabtec has provided products – from brakes shoes to electronic braking – to the African market for many years,” said Albert J. Neupaver, Wabtec's president and chief executive officer. “By establishing a local presence in South Africa, we are making a commitment to expand our production and service capabilities in this growing market. We believe customers will benefit from faster response time and direct access to all of Wabtec's products and services.”

Income

The company declared a regular quarterly dividend of 1 cent per share in late July. The dividend was paid out on August 31.

Growth in the Second Quarter

Prior to the dividend declaration, WAB posted second-quarter results. Sales increased 20% year-over-year to a record $390 million. Earnings per share came in at 69 cent for the second quarter. The result topped the consensus estimate by 6% and surpassed the previous year's total.

Albert J. Neupaver, Wabtec's president and chief executive officer, said: “Our second quarter performance was strong, with a variety of initiatives driving growth, including international and aftermarket expansion. We generated strong cash from operations and finished the first half of the year with cash, net of debt, at about $90 million, most of which was used to complete the acquisition of POLI, a European-based manufacturer of brake equipment, after the end of the quarter.”

Higher Expectations

Wabtec stated that based on its second quarter results and outlook for the rest of the year, it increased its 2008 earnings guidance to about $2.65 per share.

The analyst community has 2008 earnings pegged at $2.67 per share, up from $2.60 over the past 90 trading days. For the 2009 year, analysts lifted forecasts in just the past week from $3.05 per share to $3.08.