The Zacks  Transportation - Equipment and Leasing industry is currently navigating a challenging macroeconomic environment. The industry grapples with challenges due to persistent inflation, tariff-related tensions and lingering supply-chain disruptions. Geopolitical woes represent further challenges.

Despite the challenging macroeconomic conditions, industry players such as Wabtec Corporation (WAB Quick QuoteWAB - Free Report) , AerCap Holdings N.V. (AER Quick QuoteAER - Free Report) ) and Herc Holdings Inc. (HRI Quick QuoteHRI - Free Report) stand out for their solid investor-friendly steps. Notably, consistent shareholder-friendly initiatives in the form of dividend payouts or share buybacks imply solid financial strength of companies in the Equipment and Leasing industry. Such moves boost investors’ confidence and positively impact the bottom line.

Industry Overview

The Zacks Transportation - Equipment and Leasing industry includes companies offering equipment financing as well as leasing and supply-chain management services. The industry includes aircraft, railcar and intermodal container lessors. Some of these companies even provide logistics and transportation solutions, such as vehicles, drivers, management and administrative services. Most industry participants offer fleet management solutions and serve customers, varying from small businesses to large international enterprises. Customers range from a wide variety of industries, the most significant being automotive, electronics, transportation, grocery, lumber and wood products, food service and home furnishing. A few of these companies provide locomotives and technology-based equipment, systems and services to freight rail and passenger transit industries.

Factors Deciding the Industry's Outlook

Strong Financial Returns for Shareholders: With economic activities gaining pace from the pandemic lows, more and more companies are allocating their increasing cash pile through dividends and buybacks to pacify long-suffering shareholders. This underlines their financial strength and confidence in the business. Among the Transportation – Equipment and Leasing industry players, on July 10, 2025, Ryder's board of directors has approved a dividend hike of 12%, thereby raising its quarterly cash dividend to 91 cents per share ($3.64 annualized) from 81 cents ($3.24 annualized). Wabtec (on Feb. 7, 2025) announced a 25% dividend increase, thereby raising its quarterly cash dividend from 20 cents per share to 25 cents.

Economic Uncertainty Remains: Tariff tensions have led to escalated trade woes across the globe. These tariff-induced economic uncertainties do not bode well for industry participants. With inflation remaining a concern, risks associated with an economic slowdown and geopolitical tensions dampen the prospects of stocks belonging to this industrial cohort. Sluggish economic growth and inflationary woes are likely to make markets more volatile in the coming days. Ongoing economic uncertainty does not bode well for industry players.

Supply-Chain Disruptions & Weak Freight Rates: Although economic activities picked up from the pandemic gloom, lingering supply-chain disruptions continue to dent stocks in the industry. Increased operating costs are also limiting bottom-line growth. Due to supply-chain troubles, costs will likely continue to be steep going forward. Below-par freight rates are also hurting the industry’s prospects. Highlighting the weak freight demand, the Cass Freight Shipments Index declined 7.6%  year over year in November. This measure has deteriorated year over year in each of the past seven months, which confirms the overall declining trend.

Zacks Industry Rank Indicates Gloomy Prospects

The Zacks Transportation - Equipment and Leasing industry, housed within the broader Zacks Transportation sector, currently carries a Zacks Industry Rank #187. This rank places it in the bottom 22% of more than 250 Zacks industries.

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.

The sell-side analysts covering the companies in this industry have been decreasing their estimates. Over the past year, the industry’s consensus earnings estimate for the current year has decreased 3.3%.

Before we present a few stocks that investors can retain, given their growth prospects, let’s take a look at the industry’s recent stock market performance and current valuation.

Industry Lags S&P 500 & Sector

The Zacks Transportation - Equipment and Leasing industry has underperformed the Zacks S&P 500 Composite index as well as the broader sector over the past year.

Over this period, the industry has declined 17.8% compared with the S&P 500 Index’s northward movement of 17.8%. The broader sector has gained 0.2%.

One-Year Price Performance

Industry's Current Valuation

On the basis of the forward 12-month price-to-earnings (P/E- F12M), a commonly used multiple for valuing equipment and leasing stocks, the industry is currently trading at 14.24X, compared with the S&P 500’s 23.21X. It is also below the sector’s P/E (F12) ratio of 13.78X.

Over the past five years, the industry has traded as high as 15.65X, as low as 8.42X and at the median of 11.66X, as the chart below shows.

P/E Ratio (Forward 12-Month)

3 Transport Equipment Leasing Stocks to Watch Now

We are presenting three stocks that are well-positioned to grow in the near term.

AerCap: Headquartered in Dublin, Ireland, AerCap engages in the lease, financing, sale, and management of commercial flight equipment in the United States, China, and internationally. The company’s shareholder-friendly initiatives in the form of dividend payments and share repurchases should boost investor confidence and positively impact the bottom line. AerCap has a solid earnings surprise history. The company's earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 31.57%. The Zacks Consensus Estimate for AerCap’s 2025 earnings has been revised 14.1% upward in the past 90 days. AER has an expected earnings growth rate of 22.81% for 2025. AER carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Price and Consensus: AER

Wabtec: This Pittsburgh, PA-based company offers technology-based locomotives, equipment, systems, and services for the freight rail and passenger transit industries worldwide. Focus on new technologies to improve safety and reliability, together with its restructuring actions and cost-cutting actions, are the main drivers of its strength lately. Its strong free cash flow generating ability helps in dividend payments and share buybacks. WAB has an impressive earnings surprise history. Wabtec's earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters (missed the mark in the remaining quarter), delivering an average beat of 4.68%. The Zacks Consensus Estimate for WAB’s 2025 earnings has been revised 1% upward over the past 90 days. WAB has an expected earnings growth rate of 18.39% for 2025. WAB carries a Zacks Rank #3 (Hold).

Price and Consensus: WAB

Herc Holdings: This Florida-based company operates as an equipment rental supplier in the United States and internationally. The company rents aerial, earthmoving, material handling, trucks and trailers, air compressors, compaction, and lighting equipment. HRI carries a Zacks Rank #3.

Herc Holdings has a solid earnings surprise history. The company's earnings outpaced the Zacks Consensus Estimate in two of the trailing four quarters (missed the mark in the remaining two quarters), delivering an average surprise of 0.93%. The Zacks Consensus Estimate for HRI’s 2025 earnings has remained unchanged in the past 90 days.

Price and Consensus: HRI