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Wabco Gains From Supply Agreements Amid China's Volatility

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On Dec 28, we issued an updated research report on Wabco Holdings, Inc. (WBC - Free Report) .

The Belgium-based supplier of commercial vehicle technologies is gaining business contracts from existing as well as new customers. During the month, the company signed a $950 million eight-year agreement with a leading manufacturer of commercial vehicles. Per the agreement, Wabco will provide advanced driver assistance systems and efficiency technologies for the manufacturer’s two original equipment manufacturer brands. Similar to this, an agreement was signed with Hyundai Motor Company in November. Per the long-term deal, Wabco will offer its broad portfolio of advanced technologies for Hyundai’s new medium-duty trucks. New agreements with companies to supply products from its wide portfolio range will aid Wabco to expand its business across the globe and drive revenue growth.

The company is also launching new technologies apart from partnering with other companies to strengthen its roots in regions that are expected to drive demand. With volatility in the Chinese market, these expansion strategies are expected to strengthen Wabco’s presence in regions like Europe, the United States, South America and India. These regions are anticipated to drive the company’s sales in fourth-quarter 2018 and full-year 2019.

Wabco Holdings Inc. Price and Consensus

In the last reported quarter, Wabco’s earnings surpassed the Zacks Consensus Estimate while revenues lagged the same. Apart from North America, Europe and India, the quarterly production in China, Japan, Korea and Thailand went down year over year that partly eroded Wabco’s top line.

Expectation of continued market volatility in China has compelled Wabco to lower guidance for 2018. The company projects net sales of approximately $3.85-$3.90 billion compared with $3.85-$3.95 billion stated earlier. It also updated its performance operating margin expectation from 14.3-14.7% to 14.2-14.4%.

In the past 60 days, the Zacks Consensus Estimate for Wabco’s fourth-quarter 2018 earnings has remain unchanged. Over the past six months, shares of the company have lost 7.3% compared with the industry’s decline of 31.1%.

It currently has a Zacks Rank #3 (Hold).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks to Consider

Some better-ranked stocks in the auto space are Fox Factory Holding Corporation (FOXF - Free Report) , Allison Transmission Holdings, Inc. (ALSN - Free Report) and Cooper Tire & Rubber Company (CTB - Free Report) . Fox Factory currently sports a Zacks Rank #1 while Cooper Tire and Allison Transmission carry a Zacks Rank #2 (Buy).

Fox Factory has an expected long-term growth rate of 5%. Shares of the company have gained 25.6% in the past six months.

Allison Transmission has an expected long-term growth rate of 10%. Share price of the company has increased 8.2% in the past six months.

Cooper Tire has an expected long-term growth rate of 4%. Over the past six months, shares of the company have gained 22.5%.

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