WAB  Wabtec Corporation

Exchange

NYSE

Sector

Capital Goods

Industry

Railroads

Market Cap.

7.27B

Vuru Grade

59.64/100

Current Price

$75.86
-0.11 (-0.14%)

Growth Price

$72.10
Fairly valued

Stability Price

$9.06
Overvalued by 88.05%

Company Metrics

  • P/E 22.71
  • P/S 2.48
  • P/B 3.29
  • EPS 3.34
  • Cash ROIC 13.50%
  • Cash Ratio 0.28
  • Dividend 0.4 / 0.53%
  • Avg. Vol. 797,382.00
  • Shares 95.83M
  • Market Cap. 7.27B

Company Description

Westinghouse Air Brake Technologies Corporation, doing business as Wabtec Corporation, provides technology-based products and services for the freight rail and passenger transit industries worldwide. The company's Freight Group manufactures and services components for new and existing freight cars and locomotives; builds new switcher locomotives; and rebuilds freight locomotives; supplies railway ... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Sluggish Conditions Continue to Derail Westinghouse Air Brake Technologies ...
Motley Fool - Oct 25, 2016
The sluggish global economy continues to impact Westinghouse Air Brake Technologies' (NYSE:WAB), or Wabtec, financial results.
Westinghouse Air Brake Technologies (WAB) Q3 2016 Results - Earnings Call ... - Seeking Alpha
Westinghouse Air Brake Technologies Corp Hits the Brakes on Costs
Motley Fool - Feb 18, 2016
While momentum within the global economy is continuing to slow, it is still pushing forward. That was evident in Westinghouse Air Brake Technologies' (NYSE:WAB), or Wabtec's, fourth-quarter earnings report, which was released before the market opened ...
What to Watch When Westinghouse Air Brake Technologies Corp. Reports Earnings
Motley Fool - Apr 22, 2016
While Westinghouse Air Brake Technologies (NYSE:WAB), or Wabtec, faced challenges in some of its key markets last year, the company expects to deliver record results in 2016.
Global Economic Headwinds Derail Westinghouse Air Brake Technologies Corp.'s ...
Motley Fool - Jul 25, 2016
The global economic and currency headwinds that had been plaguing Westinghouse Air Brake Technologies (NYSE:WAB), or Wabtec, over the past few quarters strengthened in the second quarter.
3 Things to Watch When Westinghouse Air Brake Technologies Corp. Reports Earnings
Motley Fool - Feb 16, 2016
Despite the impact weaker commodity prices and the slowing global economy is having on the rail industry, Westinghouse Air Brake Technologies (NYSE:WAB), or Wabtec, had a fairly solid year in 2015, at least through the first three quarters. What ...
Moody's assigns Baa3 rating to Wabtec's new senior unsecured notes
Moodys.com (press release) (subscription) - Oct 31, 2016
New York, October 31, 2016 -- Moody's Investors Service ("Moody's") assigned a Baa3 rating to the new senior unsecured notes due 2026 that Westinghouse Air Brake Technologies Corporation ("Wabtec") plans to issue to help fund the $1.7 billion ...
Analyst's Predictions on Westinghouse Air Brake Technologies Corporation (WAB ...
StockNewsJournal - Mar 22, 2017
Investors who are keeping close eye on the stock of Westinghouse Air Brake Technologies Corporation (NYSE:WAB) established that the company was able to keep return on investment at 9.05 in the trailing twelve month while Reuters data showed that ...
Analyst's Indicator Review for Westinghouse Air Brake Technologies Corporation ... - The USA Commerce
Here's Why Caterpillar Inc., Joy Global Inc., and Westinghouse Air Brake ...
Motley Fool - Apr 9, 2016
What: Shares of major industrial manufacturers Caterpillar (NYSE:CAT), Joy Global (NYSE:JOY), and Westinghouse Air Brake Technologies Corp. (NYSE:WAB), finished March up strongly. This continued what has been a very run for all three stocks, going ...
Stock Alert: Westinghouse Air Brake Technologies Corporation Realized ...
CML News - Mar 24, 2017
Before we cover the full analysis we make a quick alert here that Westinghouse Air Brake Technologies Corporation (NYSE:WAB) has seen its stock price move at a rock bottom low level.
Earnings According to Analysts for Westinghouse Air Brake Technologies ... - Aiken Advocate
Most Recent Stock Movements: Westinghouse Air Brake Technologies Corporation ... - Is stories
Is Westinghouse Air Brake Technologies Corporation (NYSE:WAB) Undervalued?
Business Review - Mar 24, 2017
Westinghouse Air Brake Technologies Corporation (NYSE:WAB) has an ERP5 rank of 4229. The ERP5 Rank is an investment tool that analysts use to discover undervalued companies.
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for WAB to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate WAB's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$75.86 Current Price

$72.10 Growth Price (DCF)

Fairly valued


Growth Rate Assumed by Market: 16.78%


Future Free Cash Flow Growth Rate: 15.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$9.06 Stability Price (EPV)

Overvalued by 88.05%


Discount Rate: 15.0%

$95.54 Book Price

Undervalued by 25.94%


Satisfactory Cash Return on Invested Capital over the past 5 years

WAB has somewhat efficiently invested its financial resources in buildings, projects, and equipment. If CROIC is inconsistent, it's likely WAB could be benefiting from a one-time event or has a mixed history of investing capital productively. Read the company's Annual Report to determine whether this can improve.

WAB has created $13.50 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20122013201420152016
Free Cash Flow 201.44M 194.42M 424.72M 398.83M 399.09M
divided by
Invested Capital 1.58B 1.96B 2.14B 2.41B 4.74B
Cash ROIC 12.73% 9.94% 19.85% 16.55% 8.43%

Excellent Return on Equity over the past 5 years

Over the past 5 years, WAB has generated strong profits with money shareholders have invested. This is considered one of the best indicators of quality management. Beware of extremely high Return on Equity (> 50%) as this is often unsustainable.

WAB has generated $19.05 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20122013201420152016
Net Income 251.73M 292.24M 351.68M 398.63M 313.40M
divided by
Stockholders' Equity 1.28B 1.59B 1.81B 1.70B 2.21B
Return on Equity 19.72% 18.43% 19.46% 23.45% 14.21%

Excellent Business Performance over the past 10 years

WAB has been able to maintain profitability in good times and bad. This could mean WAB has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

WAB has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Free Cash Flow 122.09M 139.67M 142.23M 155.29M 210.66M 201.44M 194.42M 424.72M 398.83M 399.09M

Weak Balance Sheet

WAB's financial position is not ideal. The key is to check whether WAB is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Cash 234.69M 141.81M 188.66M 236.94M 285.62M 215.77M 285.76M 425.85M 226.19M 398.48M
Current Assets 665.77M 725.35M 689.51M 801.95M 1.06B 1.09B 1.33B 1.64B 1.61B 2.87B
Total Assets 1.16B 1.51B 1.59B 1.80B 2.16B 2.35B 2.82B 3.30B 3.30B 6.58B
Current Liabilities 295.24M 388.05M 305.35M 348.37M 541.39M 553.06M 579.40M 738.80M 664.78M 1.45B
Total Liabilities 541.43M 862.15M 808.93M 903.31M 1.11B 1.07B 1.24B 1.50B 1.60B 4.38B
Stockholder' Equity 617.27M 645.37M 776.91M 899.77M 1.05B 1.28B 1.59B 1.81B 1.70B 2.21B
Current Ratio 2.26 1.87 2.26 2.30 1.95 1.98 2.30 2.22 2.43 1.98
TL-to-TA 0.47 0.57 0.51 0.50 0.52 0.46 0.44 0.45 0.49 0.66

Consistent Reinvestment of Profits over the past 10 years

WAB has consistently retained profits. This may put WAB in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, WAB can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Retained Earnings 524.54M 653.08M 766.22M 887.41M 1.05B 1.30B 1.58B 1.91B 2.28B 2.55B
Retained Earnings Growth - 24.51% 17.32% 15.82% 18.74% 23.16% 21.49% 21.08% 19.47% 11.95%

Competitive Industry over the past 10 years

WAB is likely operating in an industry with medium to low barriers to entry. This may mean that WAB doesn't have a characteristic that's hard to replicate, such as exclusive distribution, branding or the ability to keep costs low. If Gross Margins are at least satisfactory, it's likely that WAB invests heavily in R&D and Sales, General & Administrative expenses.

Only $9.76 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Net Income 109.57M 130.55M 115.06M 123.10M 170.15M 251.73M 292.24M 351.68M 398.63M 313.40M
divided by
Revenue 1.36B 1.57B 1.40B 1.51B 1.97B 2.39B 2.57B 3.04B 3.31B 2.93B
Net Profit Margin 8.06% 8.29% 8.21% 8.17% 8.65% 10.53% 11.39% 11.55% 12.05% 10.69%

Inconsistent Gross Profit Margins over the past 10 years

WAB has good gross profit margins, however inconsistency of these margins is a cause for concern. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

$36.30 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Gross Profit 369.62M 427.19M 393.33M 449.08M 1.93B 694.57M 764.03M 935.98M 1.05B 924.24M
divided by
Revenue 1.36B 1.57B 1.40B 1.51B 1.97B 2.39B 2.57B 3.04B 3.31B 2.93B
Gross Margin 27.18% 27.13% 28.06% 29.80% 98.11% 29.05% 29.77% 30.74% 31.68% 31.53%

Low Capital Intensity over the past 10 years

WAB has consistently used a small portion of their Net Income buying new equipment or investing in new facilities. This indicates that WAB may require minimal investment to stay competitive. This leaves them with extra money to spend on growing their business and potentially buying back stock.

15.93% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Capital Expenditure 20.42M 19.72M 18.29M 20.84M 37.97M 36.00M 41.24M 47.66M 49.43M 50.22M
divided by
Net Income 109.57M 130.55M 115.06M 123.10M 170.15M 251.73M 292.24M 351.68M 398.63M 313.40M
Capital Expenditure Ratio 18.64% 15.10% 15.90% 16.93% 22.32% 14.30% 14.11% 13.55% 12.40% 16.02%

Very Strong Dividend History over the past 10 years

WAB has consistently distributed a dividend for at least the past 10 years. Such a long dividend history suggests WAB is very established in its market and that its dividend distribution is likely to continue for a significant period of time.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Dividend Paid 1.94M 1.94M 1.92M 1.91M 3.85M 7.67M 12.64M 19.25M 26.96M 32.43M
divided by
Shares Outstanding 49.14M 48.85M 47.98M 48.01M 48.33M 96.74M 96.83M 96.89M 97.01M 91.14M
Dividend Paid Per Share 0.04 0.04 0.04 0.04 0.08 0.08 0.13 0.20 0.28 0.36
Price at Year End 34.69 38.76 41.19 53.15 69.92 86.75 74.15 88.06 71.19 83.02
Dividend Yield 0.11% 0.10% 0.10% 0.08% 0.11% 0.09% 0.18% 0.23% 0.39% 0.43%

History of Stock Buybacks over the past 10 years

WAB has some history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Shares Outstanding 49.14M 48.85M 47.98M 48.01M 48.33M 96.74M 96.83M 96.89M 97.01M 91.14M
Stock Bought Back - 0.60% 1.81% -0.06% -0.67% -50.04% -0.09% -0.05% -0.12% 6.44%
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