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Will Cost Woes Mar Wabtec's (WAB) Prospects in Q2 Earnings?

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Westinghouse Air Brake Technologies Corporation, operating as Wabtec Corporation (WAB - Free Report) , is scheduled to report second-quarter 2022 results on Aug 5, before market open.

The Zacks Consensus Estimate for Wabtec’s second-quarter earnings has remained stable at $1.22 in the past 60 days. WAB has an unimpressive surprise track record, with its earnings having surpassed estimates only once in the last four quarters (missing the consensus mark on two occasions and reporting in-line earnings in the remaining one).

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

We expect Wabtec’s second-quarter performance to have been hurt by the likely surge in operating expenses due to rising selling, general and administrative expenses.

Supply-chain disruptions (higher commodity costs and shortages of component, chip and labor) are likely to have escalated costs, thus dampening WAB’s second-quarter 2022 bottom-line performance. Elevated fuel costs are also likely to have augmented operating expenses. As a result of high costs, the operating ratio (operating expenses as a percentage of revenues) is likely to have deteriorated year over year in the to-be-reported quarter.

However, akin to the first quarter of 2022, freight net sales are likely to have increased in the June quarter owing to upbeat demand for Freight Services, components and equipment along with the acquisition of Nordco.

What Does the Zacks Model Say?

Our proven model does not predict 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, which is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Wabtec has an Earnings ESP of -2.60% as the Most Accurate Estimate is currently pegged at $1.19, 3 cents below the Zacks Consensus Estimate. 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 #4 (Sell), currently.

Highlights of Q1 Earnings

Wabtec's earnings (excluding 33 cents from non-recurring items) of $1.13 per share fell short of the Zacks Consensus Estimate of $1.14. The bottom line improved 27% year over year. The top line, which came in at $1,927 million, however, fell short of the Zacks Consensus Estimate of $1,971.6 million.

Performances of Some Transportation Companies in Q2

J.B. Hunt Transport Services, Inc. (JBHT - Free Report) reported better-than-expected second-quarter 2022 results, wherein both earnings and revenues outperformed the Zacks Consensus Estimate. JBHT’s quarterly earnings of $2.42 per share surpassed the Zacks Consensus Estimate of $1.61 and improved 50.3% year over year.

JBHT’s total operating revenues of $3,837.53 million also outperformed the Zacks Consensus Estimate of $2,908.37 million. The top line jumped 32% year over year on the back of strength in all segments. JBHT’s total operating revenues, excluding fuel surcharges, rose 21.2% year over year.

CSX Corporation (CSX - Free Report) reported better-than-expected second-quarter 2022 results, wherein both earnings and revenues outperformed the Zacks Consensus Estimate.

CSX’s quarterly earnings of 50 cents per share (excluding 4 cents from non-recurring items) beat the Zacks Consensus Estimate of 47 cents and improved 25% year over year.

CSX’s total revenues of $3,815 million outperformed the Zacks Consensus Estimate of $2,990 million. The top line increased 28% year over year on the back of higher revenues in almost all markets, driven by pricing gains, fuel surcharge and contribution from the acquisition of Quality Carriers. CSX’s overall revenues per unit increased 27%.

C.H. Robinson Worldwide’s (CHRW - Free Report) second-quarter 2022 earnings of $2.67 per share surpassed the Zacks Consensus Estimate of $1.93. Moreover, the bottom line surged 85.4% year over year. Strong performance of CHRW’s truckload and less-than-truckload businesses aided results.

Total revenues of $6,798.5 million outperformed the Zacks Consensus Estimate of $6,717.7 million. The top line jumped 22.9% year over year owing to favorable pricing across most of CHRW’s services.