Wabtec (WAB): Should You Buy, Sell, or Hold After Q4 Results?

Wabtec’s Impressive Performance and Investor Considerations

Wabtec is currently priced at $260.47 per share, rewarding its investors with a remarkable 249% return since March 2021—far outpacing the S&P 500’s 77.3% increase over the same period. In the last six months alone, the stock has climbed 34.8%, again outperforming the broader market.

But is Wabtec still a smart buy at these levels, or are expectations running too high?

What Fuels the Ongoing Debate Around Wabtec?

Westinghouse Air Brake Technologies, better known as Wabtec (NYSE:WAB), specializes in supplying equipment, systems, and software solutions to the rail industry.

Key Strengths of Wabtec

1. Expanding Operating Margins and Higher Profitability

Operating margin is a crucial indicator of a company’s profitability, reflecting earnings before taxes and interest—factors less tied to core operations.

Over the past five years, Wabtec has improved its operating margin by 4.9 percentage points, leveraging sales growth to boost efficiency. For the most recent twelve months, its operating margin stood at 16.1%.

2. Robust Long-Term EPS Growth

Tracking earnings per share (EPS) over time reveals whether a company’s expansion translates into real profitability.

Wabtec’s EPS has grown at an impressive compounded annual rate of 18.9% over the last five years, outpacing its annual revenue growth of 8.1%. This indicates that the company has become increasingly profitable on a per-share basis as it has scaled.

Potential Concern: Sluggish Organic Growth

Organic Revenue Growth Points to Challenges in Core Operations

Organic revenue, which strips out the effects of acquisitions, divestitures, and currency changes, offers a clearer view of a company’s underlying business health—especially in the heavy transportation equipment sector.

For Wabtec, organic revenue has grown by an average of 7.2% year-over-year over the past two years. This is slightly below the industry average and may signal the need for improvements in product offerings, pricing strategies, or market approach, potentially complicating future growth.

Conclusion: Is Wabtec a Buy?

Despite some challenges, Wabtec’s strengths outweigh its weaknesses. With shares recently outperforming the market and trading at a forward P/E of 25.2 (or $260.47 per share), is now the right time to invest?

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