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Wabash National Corp.

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Semi-truck trailer maker Wabash National Corp. (WNC - Free Report) is well placed to reap the benefits of a strong trailer replacement cycle this year and beyond.

With rising demand for trailers, healthy order bookings, attractive growth opportunities and a projected long-term earnings growth of 15%, this Zacks #1 Rank (Strong Buy) stock has plenty to offer aggressive growth investors.

A Compelling Growth Prospect

Wabash National posted healthy first-quarter 2012 results on April 30, including adjusted earnings of 10 cents per share that matched the Zacks Consensus Estimate. The company has now beaten the Zacks Consensus Estimate in three of the last six quarters.

Revenues shot up 25% year over year to roughly $277.7 million, buoyed by solid shipments of new trailers. Operating income improved for the 10th consecutive quarter, growing 35% to reach $5.4 million.

New trailer shipments jumped 16% year-over-year to 10,300 units. According to industry estimates, shipment volume is expected to climb roughly 20% year over year in 2012. The company reaffirmed its full year new trailer shipment target of 50,000 to 56,000 units, representing a 5%-18% annualized growth.

In May 2012, Wabash wrapped up its takeover of Wisconsin-based liquid transportation systems and engineered products maker Walker Group for $360 million in cash. Besides allowing it to venture into new markets, the acquisition will diversify the company’s portfolio, provide cost synergies and meaningfully add to its earnings.

Estimates are Shooting Up

The Zacks Consensus Estimate for 2012 has climbed 11% over the last 60 days to 98 cents per share, representing an estimated annualized growth of roughly 326%. For 2013, the Zacks Consensus Estimate rose by roughly 14% to $1.58 per share over the same period, reflecting a projected year-over-year growth of 61%.

Attractive Valuation

Wabash’s valuation looks reasonable on a P/E and PEG basis. It has a PEG ratio of 0.46, a 54% discount to the benchmark of 1 for a fairly priced stock. This indicates that the forecasted long-term growth of 15% is currently priced at a discount. Moreover, the stock is currently trading at a forward P/E of 6.90x, representing a roughly 33% discount to the peer group average of 10.32x.

Chart Shows Potential

The price and consensus chart demonstrate that the earnings estimates lines are consistently hovering above the stock price, indicating that Wabash is undervalued. The strong earnings growth potential has been captured by the widening gap between the estimate lines for 2011, 2012 and 2013.

Founded in 1985, Wabash National Corporation is among the largest manufacturers of semi trailers in North America. The company, which has a market cap of roughly $462 million, specializes in making dry van trailers, refrigerated vans, truck trailers, flatbed and drop deck trailers and intermodal equipment. Wabash operates through three segments – Commercial Trailer Products, Diversified Products and Retail. The Commercial Trailer Products segment makes standard and customized truck trailers while the Diversified Products division offers a vast array of complimentary products and customer-specific solutions. The Retail unit operates 12 retail branch locations, which distribute new and used trailers, aftermarket parts and services nationwide.

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