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Wabco (WBC) Down 3.8% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Wabco Holdings (WBC - Free Report) . Shares have lost about 3.8% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Wabco due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

WABCO Q3 Earnings & Revenues Hurt by Lower Production

Wabco Holdings delivered third-quarter 2019 earnings of $1.13 per share in the reported quarter, marking a decline from $1.41 recorded in the prior-year quarter. The bottom line also missed the Zacks Consensus Estimate of $1.75.

Reportedly, quarterly sales of WABCO declined 12.7% to $798.4 million. This decline resulted from a challenging environment that led to a slump in the global production of new trucks, buses and trailers in India and Europe. The Zacks Consensus Estimate for sales was pegged at $924 million.

During the reported quarter, gross profit decreased 13.1% year over year to $238.9 million. Operating expenses dropped $10.1 million year over year to $158 million.

Financial Details

At the end of third-quarter 2019, Wabco had cash and cash equivalents of $817.1 million compared with $503.8 million as of Dec 31, 2018. The company’s long-term debt was $808.2 million as of Sep 30, 2019, marking a decline from $845.2 million as of Dec 31, 2018.

At the end of third-quarter 2019, WABCO witnessed net cash provided by operating activities of $307.5 million compared with $300.5 million a year ago.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

Currently, Wabco has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Wabco has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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