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Wabtec (WAB) Surges 5.6%: Is This an Indication of Further Gains?

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Westinghouse Air Brake Technologies (WAB - Free Report) or Wabtec shares ended the last trading session 5.6% higher at $91.85. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 4% gain over the past four weeks.

The uptick was driven by the deal signed by Wabtec with major railroad operator, Union Pacific (UNP - Free Report) . The locomotive modernization deal (estimated value of more than $1 billion) is the largest in the rail industry. Following the deal, Wabtec is responsible for modernizing 600 locomotives owned by Union Pacific. The procedure will result in the recycling of about 70,000 tons of steel and a reduction of 350 tons of carbon per year for every modernized locomotive following fuel efficiency upgrades.

This maker of parts for locomotives, subways and buses is expected to post quarterly earnings of $1.22 per share in its upcoming report, which represents a year-over-year change of +15.1%. Revenues are expected to be $2.08 billion, up 3.5% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Wabtec, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on WAB going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Wabtec is part of the Zacks Transportation - Equipment and Leasing industry. Air Lease (AL - Free Report) , another stock in the same industry, closed the last trading session 2.8% higher at $35.43. AL has returned 5.1% in the past month.

For Air Lease, the consensus EPS estimate for the upcoming report has changed -4.9% over the past month to $0.96. This represents a change of +28% from what the company reported a year ago. Air Lease currently has a Zacks Rank of #3 (Hold).


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