Wabtec to Benefit From Dellner Couplers Buyout: Here's How

Wabtec Corporation (WAB) is strengthening its operations with strategic acquisitions. To this end, Wabtec has inked a deal to acquire Dellner Couplers for $960 million in cash, financed through its cash on hand and short-term debt.  The deal is subject to customary closing conditions and regulatory approvals.Sweden-based Dellner Couplers is known for its highly engineered safety-critical train connection systems and services for passenger rail rolling stock. With a global base of almost 100,000 couplers and 12,500 gangways, Dellner Couplers offers an extensive range of train connection systems supported by production, assembly, and aftermarket service facilities in 13 countries, serving over 200 customers.How Will Wabtec Benefit?The acquisition of Dellner Couplers is anticipated to generate immediate shareholder value, featuring an accretive growth profile, accretive adjusted earnings before interest and taxesmargins, accretive adjusted earnings in the first year of ownership and an accretive return on invested capital over time.  The purchase price marks an estimated multiple of 12.5x projected 2025 earnings before interest, taxes, depreciation and amortizationadjusted for transaction costs and projected run-rate cost synergies of $22 million (which is anticipated to be realized over a three-year period).  Dellner Couplers is anticipated to generate almost $250 million in revenues in 2025.  Considering the consistency and growth in the passenger rail market, the acquisition marks a strategic move for Wabtec to strengthen its portfolio of mission-critical passenger rail systems.Rafael Santana, president and chief executive officer at Wabtec, stated, “Dellner Couplers provides significant synergies by complementing our core Transit systems portfolio, servicing a joint customer base, and leveraging our strong service capabilities.  This acquisition aligns very well with our stated growth strategies to accelerate the innovation of scalable technologies, expand high margin recurring revenues, and to drive improved operational performance.”WAB’s Zacks Rank & Price PerformanceWabtec currently carries a Zacks Rank #3 (Hold).WAB shares have gained 27.9% in the past year, outperforming its transportation equipment and leasing industry and the S&P 500, of which the company is a key member.WAB Stock One-Year Price ComparisonImage Source: Zacks Investment ResearchStocks to ConsiderInvestors interested in the Zacks Transportation sector may also considerSkyWest SKYW and Frontier Group ULCC.SkyWestSkyWest 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 9.1% over the past six months.Frontier Group Frontier Group flaunts 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 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 surged 43% in the past six months.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>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