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Will Cost-Control Efforts Boost Wabtec's (WAB) Q1 Earnings?

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Westinghouse Air Brake Technologies Corporation, operating as Wabtec Corporation (WAB - Free Report) , is scheduled to report first-quarter 2021 results on Apr 29, before market open.

The company does not have a decent track record with respect to earnings history. While its earnings outperformed the Zacks Consensus Estimate in two of the last four quarters, it missed estimates in the other two.

Let’s see how things are shaping up for this earnings season.

Factors to Note

While volumes have improved with the economy gradually recovering, it continues to be below pre-pandemic levels. Net sales at the Freight segment are likely to have been hurt by organic sales decline and foreign exchange woes, besides coronavirus-induced disruptions. Meanwhile, Transit net sales are expected to have been affected by low organic sales and coronavirus-led weak after-market sales.

However, cost-containment efforts and synergies from the Wabtec-GE Transportation merger are anticipated to have aided first-quarter performance. Low operating expenses due to reduction in selling, general and administrative costs are likely to have supported the bottom line. The anticipated decline in operating expenses should reflect in the operating ratio (operating expenses as a percentage of revenues). Notably, lower the value of the metric, the better.

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 +4.14% as the Most Accurate Estimate is pegged at 88 cents, higher than the Zacks Consensus Estimate of 85 cents. 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 #2.

Highlights of Q4 Earnings

In the last-reported quarter, the company delivered a negative earnings surprise of 7.5%. The bottom line also declined 5.8% year over year due to lower revenues. Total sales not only lagged the Zacks Consensus Estimate but also fell 14.5% year over year due to weak revenues from freight equipment, components, digital electronics and transit aftermarket sales.

Other Stocks to Consider

Investors interested in the broader Transportation sector may also consider United Parcel Service (UPS - Free Report) , JetBlue Airways Corp. (JBLU - Free Report) and Hawaiian Holdings (HA - Free Report) , as these stocks too possess the right combination of elements to beat estimates this reporting cycle.

UPS has an Earnings ESP of +2.07% and a Zacks Rank #3. The company will release first-quarter 2021 earnings on Apr 27.

JetBlue Airways has an Earnings ESP of +3.79% and a Zacks Rank of 3. The company is set to release first-quarter 2021 earnings numbers on Apr 27.

Hawaiian Holdings has an Earnings ESP of +0.40% and a Zacks Rank #3. The company will announce first-quarter 2021 financial numbers on Apr 27.

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