Westinghouse Air Brake Technologies Corporation, which operates as Wabtec Corporation (WAB - Free Report) , is performing impressively at the moment. Also, we are optimistic on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
Let’s take a look into the factors that make this Zacks Rank #2 (Buy) stock a compelling choice for investors right now.
An Outperformer: Wabtec has outperformed its industry on a year-to-date basis. While the stock has gained 29.7%, the industry’s rallied 3.1%.
Year-to-Date Price Performance
Earnings Estimates Moving Up: Annual estimates for Wabtec moved north over the past three months, reflecting analysts’ confidence on the stock. Over this period, the Zacks Consensus Estimate for current-year earnings climbed 0.8% to $3.89. For 2019, the same inched up 1.3% to $4.58 over the same time frame.
Given the wealth of information at their disposal, it is in the best interest of investors to be guided by broker advice and the direction of their estimate revisions. This is because the direction of estimate revisions serves as an important pointer when it comes to the price of a stock.
Solid Growth Prospects: The Zacks Consensus Estimate for Wabtec’s current-year earnings reflects an expected year-over-year growth of 13.4%. The bottom line is anticipated to register a 17.7% growth in 2019. The stock also has an expected earnings per share growth rate of 11.5% for three to five years, higher than the industry average of 9.8%.
The scenario is bullish with respect to revenues as well. For 2018, the Zacks Consensus Estimate for the company is $4.25 billion, representing 9.5% revenue growth over 2017. Next year’s average forecast stands at $4.48 billion, mirroring a 5.5% year-over-year growth.
Impressive Earnings Surprise History: Wabtec has an impressive earnings surprise history. The company has outpaced the Zacks Consensus Estimate in three of the trailing four quarters, delivering a positive average earnings surprise of 2.3%.
GE-Wabtec Deal: Wabtec’s merger-related deal with GE Transportation,a unit of General Electric Company (GE - Free Report) , is an added positive for the company. Valued at $11.1 billion, the transaction is anticipated to close by early 2019. To this end, Wabtec recently stated that it expects adjusted earnings before interest, taxes, depreciation and amortization to increase between $900 million and $1 billion next year.
Upbeat Outlook: Wabtec's outlook for the full year is encouraging. While releasing its second-quarter results, the company raised the guidance for 2018 earnings and revenues, courtesy of an impressive first-half performance.
It now anticipates earnings per share (excluding estimated costs of the proposed merger with GE Transportation and certain other items) of $3.85, higher than $3.80 projected earlier. Additionally, revenues are estimated to be approximately $4.2 billion, above its previous expectation of $4.1 billion. The company expects operating margin (income from operations as percentage of net sales) of 13.5% in the year, higher than 13.1% achieved in 2017.
Other Stocks to Consider
Investors interested in the broader Transportation Sector may also consider stocks like SkyWest, Inc. (SKYW - Free Report) and ArcBest Corporation (ARCB - Free Report) , each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of SkyWest and ArcBest have gained 4% and 44%, respectively, in the past six months.
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