Here's Why You Should Retain Wabtec Stock in Your Portfolio

Westinghouse Air Brake Technologies Corporation WAB, operating as Wabtec Corporation, is benefiting from robust market demand and improved operational efficiency. The shareholder-friendly approach also bodes well for the company. However, high operating expenses are challenging the company’s prospects.Factors Favoring WabtecWabtec’s $960 million acquisition of Dellner Couplers strengthens its position in the rail industry by adding Dellner’s advanced train connection systems to its portfolio. The deal enhances Wabtec’s transit systems, providing synergies, expanding high-margin revenue streams and accelerating growth. With Dellner’s 84-year legacy and solid financial track record, the acquisition is expected to drive immediate shareholder value, improve operational performance, and support Wabtec’s long-term innovation and sustainability goals in the passenger rail market.Wabtec’s solid backlog growth demonstrates strong market demand and visibility into future revenues. The 3% increase in the 12-month backlog and a 1.2% rise in the total backlog highlight a positive trend in the company's order book. The 12-month backlog grew by $224 million year over year, reflecting robust customer commitments.Additionally, the multi-year backlog saw a $273 million increase, confirming the company’s healthy long-term prospects. Excluding foreign currency impacts, these figures show even stronger growth, with a 5.5% rise in the 12-month backlog and 3.6% in the multi-year backlog, reinforcing Wabtec's solid market position and outlook.Wabtec's commitment to its shareholders is commendable, with consistent returns through dividends and share repurchases. In 2021, the company paid $92 million in dividends and repurchased $300 million in shares. These figures grew to $111 million and $473 million in 2022 and $123 million and $409 million in 2023, respectively. In 2024, WAB returned $1.2 billion to shareholders through share repurchases and dividends. Additionally, the company approved a 25% dividend increase in fourth quarter of 2024 raising it to 25 cents per share, effective March 7, 2025.Owing to such tailwinds, Wabtec shares have rallied 32.2% year over year, surpassing the Transportation - Equipment and Leasing industry’s 23.5% fall in the same period.Image Source: Zacks Investment ResearchWAB: Key Risks to WatchWabtec is grappling with increased operating expenses adversely impacting its prospects. In 2024, operating expenses rose 4.7% year over year, following a 9.7% increase in 2023. The primary driver of these increases has been higher labor costs. Selling, general and administrative (SG&A) expenses grew 9.6% year over year in 2024, largely due to the escalating costs of labor.High volatility is a concern for companies like WAB, as their performance is heavily influenced by the unstable economy. With a beta of 1.31, WAB’s stock is more volatile than the overall market, making it more susceptible to significant fluctuations.WAB’s Zacks RankWAB currently carries a Zacks Rank #3 (Hold).Stocks to ConsiderInvestors interested in the Transportation sector may also consider SkyWest SKYW and Frontier Group ULCC.SkyWest currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.SKYW has an expected earnings growth rate of 16% for the current year. The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 16.7%. Shares of SKYW have risen 14% over the past six months.Frontier Group sports a Zacks Rank of 1 at present. ULCC has an expected earnings growth rate of more than 300% for the current year.The company has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed once. The average surprise is 1.1%. Shares of ULCC have rallied 16.9% in the past six months.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report SkyWest, Inc. (SKYW): Free Stock Analysis Report Wabtec (WAB): Free Stock Analysis Report Frontier Group Holdings, Inc. (ULCC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks