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Wabtec (WAB) to Report Q3 Earnings: What's in the Cards?

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Westinghouse Air Brake Technologies Corporation, operating as Wabtec Corporation (WAB - Free Report) , is scheduled to report third-quarter 2020 results on Oct 29, before market open.

The company has a pleasant earnings history as its bottom line outperformed the Zacks Consensus Estimate in three of the last four quarters and missed the mark in the remaining period. The trailing four-quarter earnings surprise is 3.7%, on average.

Moreover, the Zacks Consensus Estimate for third-quarter 2020 earnings has been stable at 90 cents in the past 60 days.

Given this backdrop, let’s delve into the factors that might have impacted the company’s performance in the third quarter.

We expect Wabtec's third-quarter 2020 results to be hurt by tepid sales due to coronavirus-induced disruptions. Sales from both segments, namely Transit and Freight, are likely to have been low in the to-be-reported quarter.

Moreover, the operating ratio (operating expenses as a percentage of revenues) is likely to have deteriorated in the September quarter due to soft revenues. Adverse foreign currency movements might have also dented the company’s third-quarter performance.

However, the company’s efforts to cut costs in the face of a sluggish freight locomotive market due to declining volumes are expected to have aided the bottom-line performance in the to-be-reported quarter. Owing to its cost-containment measures, selling, general and administrative expenses are likely to have been down, thereby reducing operating expenses.

What Does the Zacks Model Say?

Our proven model predicts an earnings beat for Wabtec this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Wabtec has an Earnings ESP of +1.29% since the Most Accurate Estimate is pegged at 92 cents, higher than the Zacks Consensus Estimate of 90 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 #3, currently.

Highlights of Q2 Earnings

Wabtec’s earnings (excluding 41 cents from non-recurring items) of 87 cents per share surpassed the Zacks Consensus Estimate of 77 cents. However, the bottom line fell 17.9% year over year. Moreover, total sales decreased 22.3% year over year to $1,737.4 million and also missed the Zacks Consensus Estimate of $1,808.8 million.

Other Stocks to Consider

Investors interested in the broader Transportation sector may check out a few other stocks worth considering like United Parcel Service (UPS - Free Report) , Werner Enterprises (WERN - Free Report) and Schneider National (SNDR - Free Report) as these too possess the perfect combination of elements to beat estimates this earnings season.

UPS has an Earnings ESP of +4.52% and a Zacks Rank #2, presently. The company will release third-quarter 2020 results on Oct 28.

Werner Enterprises has an Earnings ESP of +2.78% and a Zacks Rank of 1, presently. The company will release third-quarter 2020 results on Oct 28.

Schneider National has an Earnings ESP of +1.82% and a Zacks Rank of 2, presently. The company will release third-quarter 2020 results on Oct 29.

 

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