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Westinghouse Air Brake Technologies Corporation (WAB - Free Report) currently benefits from a strong cash balance and strategic acquisitions.
Wabtec's earnings (excluding 33 cents from non-recurring items) of $1.13 per share fall short of the Zacks Consensus Estimate of $1.14. The bottom line improved 27% year over year, driven by a 1.4 percentage point margin expansion to 16.5% and 5.29% higher revenues to $1,927 million, despite supply-chain disruptions. The top line, however, fell short of the Zacks Consensus Estimate of $1,971.6 million.
How is Wabtec Faring?
WAB exited the first quarter of 2022 with cash and equivalents of $488 million, significantly above the current debt of $14 million. This indicates that Wabtec has enough cash to meet its current debt obligations. Additionally, its current ratio (a measure of liquidity) at the end of the March quarter stood at 1.36, higher than the reading of 1.32 at 2021 end.
Wabtec’s acquisition of Collins Aerospace’s ARINC rail solutions business segment in June 2022 is expected to drive growth. The transaction expands its digital and electronics portfolio, and enhances productivity, safety and efficiency across the global rail network. The acquisition helps WAB expand across the United States and Canada, and offer support for transit, regional, inter-city, commuter, subway and light rail systems through ARINC’s rail solutions business.
Additionally, Wabtec’s acquisition of Nordco in 2021 helped it widen its installed base, and facilitate growth on the domestic and international fronts across the latter’s innovative products’ portfolio. In January, WAB acquired the railway friction business from India-based MASU for approximately $34 million. The buyout strengthens Wabtec’s installed base and expand its brake product portfolio. The series of acquisitions is expected to boost WAB’s top line.
High operating expenses are hurting Wabtec's bottom line. Total operating expenses in the first quarter of 2022 increased 4.1% year over year to $356 million, primarily due to an 18% rise in engineering costs and a 1.7% uptick in selling, general and administrative expenses. The operating ratio (operating expenses as a percentage of revenues) deteriorated 30 basis points from the year-ago quarter’s figure to 18.4%.
Ryder has a trailing-four quarter surprise of 48.2%, on average, with its earnings having surpassed the Zacks Consensus Estimate in all the last four quarters. R is benefiting from improving economic and freight conditions in the United States.
Revenues in all segments grew (on higher rental revenues, new business and favorable pricing) in first-quarter 2022. R currently sports a Zacks Rank #1.
The expected long-term (three-to-five years) earnings per share (EPS) growth rate for C.H. Robinson is pegged at 9%. Better freight market conditions are aiding CHRW.
In first-quarter 2022, the top line improved 41.8% owing to favorable truckload pricing for customers and handsome profits in ocean freight. CHRW currently sports a Zacks Rank of 1.
GATX has a trailing-four quarter surprise of 40.1%, on average, with its earnings having surpassed the Zacks Consensus Estimate in all the last four quarters. The gradual improvement in the North American railcar leasing market is a boon for GATX.
GATX currently has a Zacks Rank #2 (Buy).
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Solid Cash Balance Boosts Wabtec (WAB) Despite Expense Woes
Westinghouse Air Brake Technologies Corporation (WAB - Free Report) currently benefits from a strong cash balance and strategic acquisitions.
Wabtec's earnings (excluding 33 cents from non-recurring items) of $1.13 per share fall short of the Zacks Consensus Estimate of $1.14. The bottom line improved 27% year over year, driven by a 1.4 percentage point margin expansion to 16.5% and 5.29% higher revenues to $1,927 million, despite supply-chain disruptions. The top line, however, fell short of the Zacks Consensus Estimate of $1,971.6 million.
How is Wabtec Faring?
WAB exited the first quarter of 2022 with cash and equivalents of $488 million, significantly above the current debt of $14 million. This indicates that Wabtec has enough cash to meet its current debt obligations. Additionally, its current ratio (a measure of liquidity) at the end of the March quarter stood at 1.36, higher than the reading of 1.32 at 2021 end.
Wabtec’s acquisition of Collins Aerospace’s ARINC rail solutions business segment in June 2022 is expected to drive growth. The transaction expands its digital and electronics portfolio, and enhances productivity, safety and efficiency across the global rail network. The acquisition helps WAB expand across the United States and Canada, and offer support for transit, regional, inter-city, commuter, subway and light rail systems through ARINC’s rail solutions business.
Additionally, Wabtec’s acquisition of Nordco in 2021 helped it widen its installed base, and facilitate growth on the domestic and international fronts across the latter’s innovative products’ portfolio. In January, WAB acquired the railway friction business from India-based MASU for approximately $34 million. The buyout strengthens Wabtec’s installed base and expand its brake product portfolio. The series of acquisitions is expected to boost WAB’s top line.
High operating expenses are hurting Wabtec's bottom line. Total operating expenses in the first quarter of 2022 increased 4.1% year over year to $356 million, primarily due to an 18% rise in engineering costs and a 1.7% uptick in selling, general and administrative expenses. The operating ratio (operating expenses as a percentage of revenues) deteriorated 30 basis points from the year-ago quarter’s figure to 18.4%.
Zacks Rank & Key Picks
Wabtec currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the broader Zacks Transportation sector are Ryder System, Inc. (R - Free Report) , C.H. Robinson Worldwide, Inc. (CHRW - Free Report) and GATX Corporation (GATX - Free Report) .
Ryder has a trailing-four quarter surprise of 48.2%, on average, with its earnings having surpassed the Zacks Consensus Estimate in all the last four quarters. R is benefiting from improving economic and freight conditions in the United States.
Revenues in all segments grew (on higher rental revenues, new business and favorable pricing) in first-quarter 2022. R currently sports a Zacks Rank #1.
The expected long-term (three-to-five years) earnings per share (EPS) growth rate for C.H. Robinson is pegged at 9%. Better freight market conditions are aiding CHRW.
In first-quarter 2022, the top line improved 41.8% owing to favorable truckload pricing for customers and handsome profits in ocean freight. CHRW currently sports a Zacks Rank of 1.
GATX has a trailing-four quarter surprise of 40.1%, on average, with its earnings having surpassed the Zacks Consensus Estimate in all the last four quarters. The gradual improvement in the North American railcar leasing market is a boon for GATX.
GATX currently has a Zacks Rank #2 (Buy).