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Westinghouse Air Brake Technologies Corporation (WAB) is a leading provider of locomotives, technology-based equipment, systems, and services to the global freight rail and passenger transit industries. Valued at a market cap of $29.8 billion, it operates through two segments: Transit and Freight.
Companies worth $10 billion or more are generally described as “large-cap stocks.” WAB effortlessly fits that bill, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the railroad industry.
The company has demonstrated a strong market presence and the ability to meet demand in the freight and transit sectors, reflecting its competitive edge and successful business strategies. Its strategic acquisition of LKZ, a locomotive manufacturing company, enhances its product offerings and global reach, with operations in over 50 countries and products in more than 100 countries.
WAB currently hovers around its 52-week high of $172, achieved on Sep. 13. Over the past three months, WAB stock gained 6.2%, outperforming the S&P 500 Index’s ($SPX) 3.7% gains during the same time frame.
In the longer term, shares of WAB climbed 34.1% on a YTD basis and surged 58% over the past 52 weeks, outpacing SPX’s YTD gains of 18.1% and solid 26.6% returns over the last year.
To confirm the bullish trend, WAB has traded above its 20-day moving average since late October and over its 200-day moving average since mid-August.
WAB's solid market momentum stems from solid demand in the freight and transit sectors, which has significantly boosted sales, while the company’s commitment to delivering high-quality products enhances productivity and reliability, strengthening its market position. Additionally, the effective execution of innovative and efficient business strategies has led to increased sales and earnings per share over the years.
On Jul. 24, WAB shares fell 6% following the release of Q2 earnings results that, despite beating Wall Street expectations, did not fully satisfy market sentiment. Although the quarter showed solid performance, investors had anticipated stronger outcomes. Concerns arose from a lower-than-expected backlog and the absence of an increase in full-year revenue guidance. While the company did raise its full-year EPS guidance, the midpoint remained below consensus estimates, contributing to the decline.
In the competitive arena of railroad stocks, Union Pacific Corporation (UNP) has struggled to keep up with WAB, showing resilience with a 2.8% uptick on a YTD basis and solid 18.3% gains over the past 52 weeks.
Wall Street analysts are reasonably optimistic about WAB’s prospects. The stock has a consensus “Moderate Buy” rating from the eight analysts covering it, and the mean price target of $184.11 suggests a potential upside of 8.2% from current price levels.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
