While the S&P 500 is up 12% since April 2026, Wabtec (currently trading at $286.55 per share) has lagged behind, posting a return of 6.8%. This may have investors wondering how to approach the situation.
Given the relatively weaker price action, does WAB warrant a spot on your radar, or is it better left off your list? Find out in our full research report, it’s free.
Why Are We Positive on Wabtec?
Also known as Wabtec, Westinghouse Air Brake Technologies (NYSE:WAB) provides equipment, systems, and related software for the railway industry.
1. Operating Margin Rising, Profits Up
Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
Analyzing the trend in its profitability, Wabtec’s operating margin rose by 4 percentage points over the last five years, as its sales growth gave it operating leverage. Its operating margin for the trailing 12 months was 16.4%.
2. Outstanding Long-Term EPS Growth
Analyzing the long-term change in earnings per share (EPS) shows whether a company’s incremental sales were profitable — for example, revenue could be inflated through excessive spending on advertising and promotions.
Wabtec’s EPS grew at 20.6% compounded annual growth rate over the last five years, higher than its 9.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Excellent Free Cash Flow Margin Boosts Reinvestment Potential
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Wabtec has shown robust cash profitability, enabling it to comfortably ride out cyclical downturns while investing in plenty of new offerings and returning capital to investors. The company’s free cash flow margin averaged 12.2% over the last five years, quite impressive for an industrials business.
Final Judgment
These are just a few reasons why we’re bullish on Wabtec. With its shares underperforming the market lately, the stock trades at 24.9× forward P/E (or $286.55 per share). Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
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