Wabtec trades at $168.33 per share and has stayed right on track with the overall market, losing 10.4% over the last six months while the S&P 500 is down 9.8%. This was partly due to its softer quarterly results and may have investors wondering how to approach the situation.
Given the weaker price action, is this a buying opportunity for WAB? Find out in our full research report, it’s free.
Why Are We Positive On WAB?
Also known as Wabtec, Westinghouse Air Brake Technologies (NYSE:WAB) provides equipment, systems, and related software for the railway industry.
1. Core Business Firing on All Cylinders
Investors interested in Heavy Transportation Equipment companies should track organic revenue in addition to reported revenue. This metric gives visibility into Wabtec’s core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement.
Over the last two years, Wabtec’s organic revenue averaged 10.8% year-on-year growth. This performance was impressive and shows it can expand quickly without relying on expensive (and risky) acquisitions. 
2. EPS Increasing Steadily
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Wabtec’s EPS grew at a solid 10.7% compounded annual growth rate over the last five years, higher than its 4.8% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Increasing Free Cash Flow Margin Juices Financials
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.
As you can see below, Wabtec’s margin expanded by 7.1 percentage points over the last five years. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability. Wabtec’s free cash flow margin for the trailing 12 months was 15.7%.
Final Judgment
These are just a few reasons why Wabtec ranks highly on our list. With the recent decline, the stock trades at 19.4× forward price-to-earnings (or $168.33 per share). Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More Than Wabtec
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.