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Why Is Wabtec (WAB) Up 2.3% Since Last Earnings Report?
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A month has gone by since the last earnings report for Westinghouse Air Brake Technologies (WAB - Free Report) . Shares have added about 2.3% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Wabtec due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Wabtec’s Q2 Earnings Surpass Estimates
Wabtec reported second-quarter 2020 earnings (excluding 41 cents from non-recurring items) of 87 cents per share. The figure surpassed the Zacks Consensus Estimate of 77 cents. However, the bottom line declined 17.9% year over year.
Total sales declined 22.3% year over year to $1,737.4 million and missed the Zacks Consensus Estimate of $1,808.8 million. This year-over-year decline was caused by lower sales in Freight Equipment, Services, Components and Transit sales as well as unfavorable changes in foreign currency translations.
Total operating expenses in the reported quarter dropped 21% to $327.3 million, with 25.5% reduction in selling, general and administrative expenses. Also, the operating ratio (operating expenses as a percentage of revenues) deteriorated to 18.8% from 18.5% in the prior-year quarter owing to lower revenues. Notably, lower the value of the metric the better.
Segmental Highlights
At the Transit segment, net sales fell 25% to $533 million. Results were hurt by organic sales decline of $160 million and unfavorable currency translations. The coronavirus-induced lower original equipment and aftermarket sales also hurt segmental numbers. Segmental operating margin (income from operations as a percentage of sales) declined to 7.5% from 8.8% in the year-ago quarter.
Freight net sales declined 21% to $1,204.7 million due to organic sales fall and adverse foreign currency movements. Segmental results were boosted by sales from acquisitions worth $19 million. Segmental operating margin improved to 11.7% from 11% in the year-ago quarter.
Balance Sheet Data
As of Jun 30, Wabtec had $587.9 million in cash and cash equivalents compared with $604.2 million at the end of 2019. Long-term debt at the end of the quarter was $3,768.7 million compared with $4,333.6 million at 2019 end.
Mixed 2020 Guidance
For the current year, sales are anticipated range of $7.3 - $7.6 billion. Meanwhile, adjusted earnings per share are forecast in the band of $3.50-$3.80. Moreover, the company hopes to achieve net synergy benefit of more than $150 million in the current year owing to cost-cutting measures and synergies from its merger with GE Transportation. Further, Wabtec expects cash flow conversions to be greater than 90%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
VGM Scores
At this time, Wabtec has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile 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
Wabtec has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Wabtec (WAB) Up 2.3% Since Last Earnings Report?
A month has gone by since the last earnings report for Westinghouse Air Brake Technologies (WAB - Free Report) . Shares have added about 2.3% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Wabtec due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Wabtec’s Q2 Earnings Surpass Estimates
Wabtec reported second-quarter 2020 earnings (excluding 41 cents from non-recurring items) of 87 cents per share. The figure surpassed the Zacks Consensus Estimate of 77 cents. However, the bottom line declined 17.9% year over year.
Total sales declined 22.3% year over year to $1,737.4 million and missed the Zacks Consensus Estimate of $1,808.8 million. This year-over-year decline was caused by lower sales in Freight Equipment, Services, Components and Transit sales as well as unfavorable changes in foreign currency translations.
Total operating expenses in the reported quarter dropped 21% to $327.3 million, with 25.5% reduction in selling, general and administrative expenses. Also, the operating ratio (operating expenses as a percentage of revenues) deteriorated to 18.8% from 18.5% in the prior-year quarter owing to lower revenues. Notably, lower the value of the metric the better.
Segmental Highlights
At the Transit segment, net sales fell 25% to $533 million. Results were hurt by organic sales decline of $160 million and unfavorable currency translations. The coronavirus-induced lower original equipment and aftermarket sales also hurt segmental numbers. Segmental operating margin (income from operations as a percentage of sales) declined to 7.5% from 8.8% in the year-ago quarter.
Freight net sales declined 21% to $1,204.7 million due to organic sales fall and adverse foreign currency movements. Segmental results were boosted by sales from acquisitions worth $19 million. Segmental operating margin improved to 11.7% from 11% in the year-ago quarter.
Balance Sheet Data
As of Jun 30, Wabtec had $587.9 million in cash and cash equivalents compared with $604.2 million at the end of 2019. Long-term debt at the end of the quarter was $3,768.7 million compared with $4,333.6 million at 2019 end.
Mixed 2020 Guidance
For the current year, sales are anticipated range of $7.3 - $7.6 billion. Meanwhile, adjusted earnings per share are forecast in the band of $3.50-$3.80. Moreover, the company hopes to achieve net synergy benefit of more than $150 million in the current year owing to cost-cutting measures and synergies from its merger with GE Transportation. Further, Wabtec expects cash flow conversions to be greater than 90%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
VGM Scores
At this time, Wabtec has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile 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
Wabtec has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.