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Wabtec Strong on Revenues Amid High Operating Expenses
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We recently issued an updated report on Westinghouse Air Brake Technologies Corporation (WAB - Free Report) , which operates as Wabtec. Factors like escalating operating expenses and high-debt levels are detrimental to the company’s growth prospects. However, the expanded portfolio due to its merger with GE Transportation is encouraging.
In February 2019, Wabtec completed the merger with GE Transportation, a business unit of GE.The combined company has an expanded product portfolio and a larger customer base. Inclusion of GE Transportation products helped the company's sales increasein excess of 100% in the second quarter of 2019. Apart from this, Wabtec acquired ELCO Locomotives. It increased Wabtec’s freight services capabilities.
Westinghouse Air Brake Technologies Corporation Price
Wabtec anticipates sales to be $8.7 billion in 2020, higher than the 2019 figure due to the inclusion of GE Transportation products. Adjusted EBITDA is estimated at $1.6 billion. Additionally, adjusted earnings are expected between $4.5 and $4.8 per share.
Wabtec’s efforts to reward shareholders are impressive. In February, the company’s board authorized a buyback program worth up to $500 million.
However, high operating expenses and the consequent deterioration in operating ratio (operating expenses as a percentage of revenues) are headwinds. Total operating expenses surged more than 100% to $1.6 billion in 2019, primarily due to 84% rise in selling, general and administrative expense. Operating ratio deteriorated to 19.7% from 17.4% in 2018. Lower the value of the metric the better.
Again, sharp drop in revenues due to the coronavirus pandemic is likely to hurt Wabtec’s first-quarter results.
Additionally, Wabtec's high debt levels are worrisome. Long-term debt as of Dec 31, 2019, was $4.33 billion compared with $3.79 billion at 2018 end.
Long-term (three to five years) expected earnings per share growth rate for GATX, Spirit and Höegh LNG is pegged at 15%, 12% and 8.5%, respectively.
Zacks Top 10 Stocks for 2020
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Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Wabtec Strong on Revenues Amid High Operating Expenses
We recently issued an updated report on Westinghouse Air Brake Technologies Corporation (WAB - Free Report) , which operates as Wabtec. Factors like escalating operating expenses and high-debt levels are detrimental to the company’s growth prospects. However, the expanded portfolio due to its merger with GE Transportation is encouraging.
In February 2019, Wabtec completed the merger with GE Transportation, a business unit of GE.The combined company has an expanded product portfolio and a larger customer base. Inclusion of GE Transportation products helped the company's sales increasein excess of 100% in the second quarter of 2019. Apart from this, Wabtec acquired ELCO Locomotives. It increased Wabtec’s freight services capabilities.
Westinghouse Air Brake Technologies Corporation Price
Westinghouse Air Brake Technologies Corporation price | Westinghouse Air Brake Technologies Corporation Quote
Wabtec anticipates sales to be $8.7 billion in 2020, higher than the 2019 figure due to the inclusion of GE Transportation products. Adjusted EBITDA is estimated at $1.6 billion. Additionally, adjusted earnings are expected between $4.5 and $4.8 per share.
Wabtec’s efforts to reward shareholders are impressive. In February, the company’s board authorized a buyback program worth up to $500 million.
However, high operating expenses and the consequent deterioration in operating ratio (operating expenses as a percentage of revenues) are headwinds. Total operating expenses surged more than 100% to $1.6 billion in 2019, primarily due to 84% rise in selling, general and administrative expense. Operating ratio deteriorated to 19.7% from 17.4% in 2018. Lower the value of the metric the better.
Again, sharp drop in revenues due to the coronavirus pandemic is likely to hurt Wabtec’s first-quarter results.
Additionally, Wabtec's high debt levels are worrisome. Long-term debt as of Dec 31, 2019, was $4.33 billion compared with $3.79 billion at 2018 end.
Zacks Rank and Stocks to consider
Currently, Wabtec carry a Zacks Rank #3 (Hold).
Some better-ranked stocks to consider in the Zacks Transportation sector are GATX Corporation (GATX - Free Report) , Spirit Airlines, Inc. (SAVE - Free Report) and Höegh LNG Partners LP . GATX sports a Zacks Rank #1 (Strong Buy), whereas Spirit and Höegh LNG carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term (three to five years) expected earnings per share growth rate for GATX, Spirit and Höegh LNG is pegged at 15%, 12% and 8.5%, respectively.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>