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Is WAB Still Worth Holding as Growth Improves but Valuation Stretches?
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Key Takeaways
WAB's earnings are projected to grow 22.3% in 2026, aided by stronger margins and third-quarter sales.
WAB trades at 24.6X forward earnings, above industry, limiting room for execution setbacks.
WAB's $31.44B backlog aids revenue visibility, though tariffs, higher costs, delivery delays pose risks.
Wabtec Corporation (WAB - Free Report) ) is entering the final stretch of 2026 with faster earnings growth, wider margins and a larger backlog. Those gains strengthen the fundamental case after a year of substantial share-price appreciation.
The trade-off is valuation. WAB now commands a premium to its industry, sector and the broader market, so further upside increasingly depends on sustained execution rather than multiple expansion.
WAB’s Growth Case Is Getting Stronger
The Zacks Consensus Estimate points to 2026 earnings growth of 22.3% and sales growth of 11.9%. The earnings outlook has also firmed, with the current-year estimate rising 0.8% over the past four weeks and 0.9% over the past 12 weeks.
Third-quarter results support that trajectory. Sales increased 8.1% year over year to $3.12 billion, while adjusted earnings per share advanced 22% to $2.83. Adjusted operating margin expanded 1.9 percentage points to 22.9%, helped by favorable mix, productivity gains and disciplined cost management.
Wabtec’s Premium Valuation Limits the Margin for Error
WAB trades at 24.6X forward 12-month earnings, compared with 15.4X for the Zacks sub-industry, 14.9X for the Zacks Transportation sector and 18.6X for the S&P 500. The stock also trades above its five-year median multiple of 20.2X.
That premium can be supported by earnings growth and improving profitability, but it raises the bar for execution. With the multiple also near the upper end of its five-year range of 15.1X to 26.0X, weaker growth, softer margins or delayed deliveries could have a larger effect on investor sentiment.
WAB’s Backlog Supports Revenue Visibility
Backlog remains a key offset to the valuation concern. Total backlog reached $31.44 billion at Sept. 30, 2026, up 22.9% year over year, while 12-month backlog increased 8.8% to $8.99 billion.
Wabtec also continues to add long-cycle business. Recent wins included $1 billion of international locomotive and service orders, $633 million of North American locomotive and modernization orders and $159 million of transit brake orders. Its installed base and aftermarket exposure add recurring demand alongside new-equipment activity.
Wabtec Faces Tariff and Delivery Timing Risks
Tariffs, higher manufacturing costs and supply-chain expenses can limit operating leverage even as productivity initiatives support margins. Third-quarter operating performance still absorbed higher manufacturing costs and year-over-year net tariffs.
Timing is another source of variability. Some locomotive deliveries shifted from the third quarter into the fourth quarter, while the 2026 North American railcar delivery outlook was reduced to roughly 23,000 units. Railcar suppliers Trinity Industries, Inc. (TRN - Free Report) and The Greenbrier Companies, Inc. (GBX - Free Report) likewise operate directly in this softer railcar environment, making industry delivery trends relevant beyond Wabtec’s Components business.
WAB’s Mixed Style Signals Favor Patience
WAB’s improving earnings profile supports the case for existing shareholders to remain engaged, but the valuation leaves less cushion for setbacks. The balance of stronger fundamentals and a demanding multiple argues for selectivity rather than chasing the stock after its advance.
WAB currently carries a Zacks Rank #3 (Hold). It has a VGM Score of D, a Value Score of F, a Growth Score of C and a Momentum Score of C. Zacks Style Scores are designed to complement the Zacks Rank, and the weaker Value and VGM readings temper the appeal of the growth story. For now, those signals are consistent with a measured holding stance rather than an aggressive new entry. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
View the Zacks #1 Rank List
Image: Bigstock
Is WAB Still Worth Holding as Growth Improves but Valuation Stretches?
Key Takeaways
Wabtec Corporation (WAB - Free Report) ) is entering the final stretch of 2026 with faster earnings growth, wider margins and a larger backlog. Those gains strengthen the fundamental case after a year of substantial share-price appreciation.
The trade-off is valuation. WAB now commands a premium to its industry, sector and the broader market, so further upside increasingly depends on sustained execution rather than multiple expansion.
WAB’s Growth Case Is Getting Stronger
The Zacks Consensus Estimate points to 2026 earnings growth of 22.3% and sales growth of 11.9%. The earnings outlook has also firmed, with the current-year estimate rising 0.8% over the past four weeks and 0.9% over the past 12 weeks.
Wabtec Price and EPS Surprise
Wabtec price-eps-surprise | Wabtec Quote
Third-quarter results support that trajectory. Sales increased 8.1% year over year to $3.12 billion, while adjusted earnings per share advanced 22% to $2.83. Adjusted operating margin expanded 1.9 percentage points to 22.9%, helped by favorable mix, productivity gains and disciplined cost management.
Wabtec’s Premium Valuation Limits the Margin for Error
WAB trades at 24.6X forward 12-month earnings, compared with 15.4X for the Zacks sub-industry, 14.9X for the Zacks Transportation sector and 18.6X for the S&P 500. The stock also trades above its five-year median multiple of 20.2X.
That premium can be supported by earnings growth and improving profitability, but it raises the bar for execution. With the multiple also near the upper end of its five-year range of 15.1X to 26.0X, weaker growth, softer margins or delayed deliveries could have a larger effect on investor sentiment.
WAB’s Backlog Supports Revenue Visibility
Backlog remains a key offset to the valuation concern. Total backlog reached $31.44 billion at Sept. 30, 2026, up 22.9% year over year, while 12-month backlog increased 8.8% to $8.99 billion.
Wabtec also continues to add long-cycle business. Recent wins included $1 billion of international locomotive and service orders, $633 million of North American locomotive and modernization orders and $159 million of transit brake orders. Its installed base and aftermarket exposure add recurring demand alongside new-equipment activity.
Wabtec Faces Tariff and Delivery Timing Risks
Tariffs, higher manufacturing costs and supply-chain expenses can limit operating leverage even as productivity initiatives support margins. Third-quarter operating performance still absorbed higher manufacturing costs and year-over-year net tariffs.
Timing is another source of variability. Some locomotive deliveries shifted from the third quarter into the fourth quarter, while the 2026 North American railcar delivery outlook was reduced to roughly 23,000 units. Railcar suppliers Trinity Industries, Inc. (TRN - Free Report) and The Greenbrier Companies, Inc. (GBX - Free Report) likewise operate directly in this softer railcar environment, making industry delivery trends relevant beyond Wabtec’s Components business.
WAB’s Mixed Style Signals Favor Patience
WAB’s improving earnings profile supports the case for existing shareholders to remain engaged, but the valuation leaves less cushion for setbacks. The balance of stronger fundamentals and a demanding multiple argues for selectivity rather than chasing the stock after its advance.
WAB currently carries a Zacks Rank #3 (Hold). It has a VGM Score of D, a Value Score of F, a Growth Score of C and a Momentum Score of C. Zacks Style Scores are designed to complement the Zacks Rank, and the weaker Value and VGM readings temper the appeal of the growth story. For now, those signals are consistent with a measured holding stance rather than an aggressive new entry. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.