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Is a Beat In Store For Wabtec Corp (WAB) in Q4 Earnings?

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Westinghouse Air Brake Technologies Corporation, operating as Wabtec Corporation (WAB - Free Report) , is scheduled to report fourth-quarter 2020 results on Feb 18, before market open.

The company has a decent 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 one. It has a trailing four-quarter earnings surprise of 4.4%, on average.

Moreover, the Zacks Consensus Estimate for fourth-quarter 2020 earnings moved up to $1.06 per share in the past 60 days.

With this, let’s discuss the factors that might have impacted the company’s performance in the fourth quarter.

 

Wabtec'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.

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

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

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 +5.99% since the Most Accurate Estimate is pegged at $1.12, higher than the Zacks Consensus Estimate of $1.06. 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 Q3 Earnings

Wabtec reported earnings (excluding 28 cents from non-recurring items) of 95 cents per share. The bottom line surpassed the Zacks Consensus Estimate of 90 cents. However, the same declined 7.8% year over year due to lower revenues. Total sales fell 6.8% year over year to $1,865.1 million but surpassed the Zacks Consensus Estimate of $1,829.1 million. The year-over-year downside was caused by weak revenues from Freight Services, Components, Digital Electronics and Transit sales.

Other Stocks to Consider

Investors interested in the Zacks Transportation sector may check out the following stocks, which also possess the right combination of elements to beat estimates in the upcoming releases.

Air Lease Corporation (AL - Free Report) has an Earnings ESP of +6.11% and a Zacks Rank #3, currently. The company will release fourth-quarter 2020 results on Feb 22.

Herc Holdings Inc. (HRI - Free Report) has an Earnings ESP of +9.63% and a Zacks Rank #2, currently. The company will release fourth-quarter 2020 results on Feb 18.

Expeditors International of Washington, Inc. (EXPD - Free Report) has an Earnings ESP of +0.32% and a Zacks Rank #3, currently. The company will release fourth-quarter 2020 results on Feb 16.

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