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What's in the Cards for Wabtec (WAB) This Earnings Season?

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

The Zacks Consensus Estimate for the company’s second-quarter earnings has been revised upward by a penny in the past 60 days. The company has an impressive earnings history, having outperformed the Zacks Consensus Estimate in three of the past four quarters, while missing the same in one.

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

Factors to Note

Wabtec’s second-quarter performance is expected to reflect sequential improvement owing to gradual recovery in global Freight and Transit rail markets, with uptick in freight volumes and equipment utilization, as well as increase in demand for freight aftermarket services.

Akin to the first quarter of 2021, the Freight segment is likely to have benefited from growth in Freight Services owing to higher modernizations and utilizations, lower locomotive parking, and improved mining sales on a year-over-year basis. However, when compared with the 2019 level, the unit’s performance might have been hurt by lingering effects of the coronavirus pandemic and lower deliveries of locomotives in North America.

While Transit segment sales are also expected to have been hurt by coronavirus-induced disruptions when compared with the 2019 levels, the unit’s performance on a year-over-year basis is anticipated to have been aided by favorable foreign currency exchange rates and improvement in operational performance as well as cost-reduction initiatives.

Wabtec’s cost-control measures are expected to get reflected in its bottom line in the second quarter. The anticipated decline in operating expenses on the back of reduction in selling, general and administrative expenses are likely to have driven the bottom line. Synergies from the Wabtec and GE Transportation merger should reflect in the company’s second-quarter performance as well.

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 +1.54% as the Most Accurate Estimate is pegged at 99 cents, higher than the Zacks Consensus Estimate of 98 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 #3.

Highlights of Q1 Earnings

In the last-reported quarter, the company delivered an earnings surprise of 4.7%. However, the bottom line declined 8.3% year over year due to lower revenues. Total sales fell 5.2% year over year due to weak revenues from freight equipment, but surpassed the Zacks Consensus Estimate.

Other Stocks to Consider

Investors interested in the broader Transportation sector may also consider Hawaiian Holdings (HA - Free Report) , Canadian Pacific Railway Limited (CP - Free Report) and Allegiant Travel Company (ALGT - Free Report) as these stocks possess the right combination of elements to beat on earnings this reporting cycle as well.

Hawaiian Holdings has an Earnings ESP of +2.93% and a Zacks Rank #2. The company will release second-quarter 2021 results on Jul 27.

Canadian Pacific has an Earnings ESP of +1.40% and a Zacks Rank #3. The company will release second-quarter 2021 results on Jul 28.

Allegiant has an Earnings ESP of +7.01% and a Zacks Rank #3. The company will release second-quarter 2021 results on Jul 28.