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Wabtec (WAB) Q4 Earnings & Revenues Miss Estimates, Fall Y/Y
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Westinghouse Air Brake Technologies Corporation, which operates as Wabtec Corporation (WAB - Free Report) , reported fourth-quarter 2020 earnings (excluding 16 cents from non-recurring items) of 98 cents per share. The bottom line fell short of the Zacks Consensus Estimate of $1.06. Moreover, the same declined 5.8% year over year due to lower revenues.
Total sales fell 14.5% year over year to $2,023.7 million and also missed the Zacks Consensus Estimate of $2,106.5 million. This year-over-year downside was caused by weak revenues from freight equipment, components, digital electronics and transit aftermarket sales.
Total operating expenses in the reported quarter dropped 23.3% to $344.4 million with 27.3% reduction in selling, general and administrative expenses. Also, operating ratio (operating expenses as a percentage of revenues) improved to 17% from 18.9% in the prior-year quarter owing to lower costs. Notably, lower the value of the metric, the better.
Westinghouse Air Brake Technologies Corporation Price, Consensus and EPS Surprise
Freight net sales fell 19.7% to $1,339.3 million. Results were hurt by organic sales decline and forex woes. The coronavirus-induced disruptions hurt segmental numbers. Consequently, services were affected, resulting in lower deliveries of locomotives, reduced demand for new freight car components and soft Digital Electronics sales. Segmental operating margin (income from operations as a percentage of sales) deteriorated to 9% from 14.3% in the year-ago quarter.
At the transit segment, net sales declined 2.4% to $684.4 million due to lower organic sales. Transit segment sales were hurt by coronavirus-led lower after-market sales, resulting from the coronavirus pandemic. Segmental operating margin improved to 8.3% from 5.6% in the year-ago quarter.
Balance Sheet Data
As of Dec 31, 2020, Wabtec, currently carrying a Zacks Rank #3 (Hold), had $598.7 million worth of cash and cash equivalents compared with $604.2 million at the end of 2019. The company generated cash from operations of $326 million in the December quarter. Long-term debt at the end of the quarter was $3,792.2 million compared with $4,333.6 million at 2019 end. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
2021 Guidance
Wabtec anticipates sales to be in the range of $7.6 billion-$7.9 billion in 2021. The mid-point of the guided range,$7.75 billion lies below the Zacks Consensus Estimate of $8.07 billion. Additionally, adjusted earnings per share are estimated in the band of $3.90-$4.30. The Zacks Consensus Estimate for the same stands at $4.39.
The company expects to achieve run rate savings of $250 million in the current year owing to cost management and synergies from the Wabtec and GE Transportation merger, which in turn should lead to improved margins. Further, it expects to generate strong cash flow in 2021 with operating cash flow conversion of greater than 90%.
Sectorial Snapshot
Let’s take a look at some of the other recently released earnings reports of companies within the Zacks Transportation sector.
United Airlines (UAL - Free Report) , carrying a Zacks Rank #4 (Sell), incurred a loss (excluding 6 cents from non-recurring items) of $7 per share in the fourth quarter of 2020, wider than the Zacks Consensus Estimate of a loss of $6.56. Meanwhile, operating revenues of $3,412 million lagged the Zacks Consensus Estimate of $3,420.4 million.
J.B. Hunt Transport Services (JBHT - Free Report) , carrying a Zacks Rank #3, reported earnings of $1.44 per share, beating the Zacks Consensus Estimate of $1.27. Total operating revenues of $2,737.7 million also surpassed the Zacks Consensus Estimate of $2,514.3 million.
Delta Air Lines (DAL - Free Report) , carrying a Zacks Rank #3, incurred a loss (excluding $1.34 from non-recurring items) of $2.53 per share in the fourth quarter of 2020, wider than the Zacks Consensus Estimate of a loss of $2.43. Total revenues of $3,973 million topped the Zacks Consensus Estimate of $3,754.5 million.
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Wabtec (WAB) Q4 Earnings & Revenues Miss Estimates, Fall Y/Y
Westinghouse Air Brake Technologies Corporation, which operates as Wabtec Corporation (WAB - Free Report) , reported fourth-quarter 2020 earnings (excluding 16 cents from non-recurring items) of 98 cents per share. The bottom line fell short of the Zacks Consensus Estimate of $1.06. Moreover, the same declined 5.8% year over year due to lower revenues.
Total sales fell 14.5% year over year to $2,023.7 million and also missed the Zacks Consensus Estimate of $2,106.5 million. This year-over-year downside was caused by weak revenues from freight equipment, components, digital electronics and transit aftermarket sales.
Total operating expenses in the reported quarter dropped 23.3% to $344.4 million with 27.3% reduction in selling, general and administrative expenses. Also, operating ratio (operating expenses as a percentage of revenues) improved to 17% from 18.9% in the prior-year quarter owing to lower costs. Notably, lower the value of the metric, the better.
Westinghouse Air Brake Technologies Corporation Price, Consensus and EPS Surprise
Westinghouse Air Brake Technologies Corporation price-consensus-eps-surprise-chart | Westinghouse Air Brake Technologies Corporation Quote
Segmental Highlights
Freight net sales fell 19.7% to $1,339.3 million. Results were hurt by organic sales decline and forex woes. The coronavirus-induced disruptions hurt segmental numbers. Consequently, services were affected, resulting in lower deliveries of locomotives, reduced demand for new freight car components and soft Digital Electronics sales. Segmental operating margin (income from operations as a percentage of sales) deteriorated to 9% from 14.3% in the year-ago quarter.
At the transit segment, net sales declined 2.4% to $684.4 million due to lower organic sales. Transit segment sales were hurt by coronavirus-led lower after-market sales, resulting from the coronavirus pandemic. Segmental operating margin improved to 8.3% from 5.6% in the year-ago quarter.
Balance Sheet Data
As of Dec 31, 2020, Wabtec, currently carrying a Zacks Rank #3 (Hold), had $598.7 million worth of cash and cash equivalents compared with $604.2 million at the end of 2019. The company generated cash from operations of $326 million in the December quarter. Long-term debt at the end of the quarter was $3,792.2 million compared with $4,333.6 million at 2019 end. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
2021 Guidance
Wabtec anticipates sales to be in the range of $7.6 billion-$7.9 billion in 2021. The mid-point of the guided range,$7.75 billion lies below the Zacks Consensus Estimate of $8.07 billion. Additionally, adjusted earnings per share are estimated in the band of $3.90-$4.30. The Zacks Consensus Estimate for the same stands at $4.39.
The company expects to achieve run rate savings of $250 million in the current year owing to cost management and synergies from the Wabtec and GE Transportation merger, which in turn should lead to improved margins. Further, it expects to generate strong cash flow in 2021 with operating cash flow conversion of greater than 90%.
Sectorial Snapshot
Let’s take a look at some of the other recently released earnings reports of companies within the Zacks Transportation sector.
United Airlines (UAL - Free Report) , carrying a Zacks Rank #4 (Sell), incurred a loss (excluding 6 cents from non-recurring items) of $7 per share in the fourth quarter of 2020, wider than the Zacks Consensus Estimate of a loss of $6.56. Meanwhile, operating revenues of $3,412 million lagged the Zacks Consensus Estimate of $3,420.4 million.
J.B. Hunt Transport Services (JBHT - Free Report) , carrying a Zacks Rank #3, reported earnings of $1.44 per share, beating the Zacks Consensus Estimate of $1.27. Total operating revenues of $2,737.7 million also surpassed the Zacks Consensus Estimate of $2,514.3 million.
Delta Air Lines (DAL - Free Report) , carrying a Zacks Rank #3, incurred a loss (excluding $1.34 from non-recurring items) of $2.53 per share in the fourth quarter of 2020, wider than the Zacks Consensus Estimate of a loss of $2.43. Total revenues of $3,973 million topped the Zacks Consensus Estimate of $3,754.5 million.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>