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Wabtec (WAB) Rides on Strong Liquidity Amid Coronavirus Woes

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We recently issued an updated report on Wabtec Corporation (WAB - Free Report) .

Wabtec’s liquidity position is improving. At the end of the June quarter, total liquidity was $1.9 billion ($588 million in cash and cash equivalents and $1.3 billion available under current credit facilities), up 58.2% sequentially. Moreover, total net debt is down about $282 million.

We are also impressed by the company’s commitment to reward shareholders despite adversities stemming from the global health peril. Recently, Wabtec paid out a quarterly cash dividend of 12 cents per share to its shareholders (as of record date Aug 14) on Aug 28.

However, the top line is affected by the coronavirus-induced disruptions. During the second quarter of 2020, the company’s total sales declined 22.3% year over year to $1,737.4 million due to lower sales in Freight Equipment, Services, Components and Transit sales as well as unfavorable changes in foreign currency translations.

Thanks to the decline in sales, operating ratio (operating expenses as a percentage of revenues) deteriorated to 18.8% from 18.5% in the prior-year quarter. In fact due to lower sales and coronavirus-induced disruptions adjusted operating income declined 32% in the June quarter.

Zacks Rank & Stocks to Consider

Wabtec currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Zacks Transportation sector are Knight-Swift Transportation Holdings Inc. (KNX - Free Report) , United Parcel Service, Inc. (UPS - Free Report) and Werner Enterprises, Inc. (WERN - Free Report) . Knight-Swift sports a Zacks Rank #1(Strong Buy), while UPS and Werner carry a Zacks Rank #2(Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term expected earnings per share (three to five years) growth rate for Knight-Swift, UPS and Werner is pegged at 15%, 7.7% and 8.5%, respectively.

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