Follow Wabtec to never miss an important update.
Oil prices jumped after an attack shut down a key pipeline in Saudi Arabia, adding new pressure to a global energy market already facing tight supplies. For a company like Wabtec, which builds and services locomotives, high fuel prices are a double-edged sword.
On one hand, when diesel costs more, shipping goods by train becomes much more attractive than using trucks because rail is far more fuel-efficient. This can lead to higher demand for Wabtec’s equipment and services. On the other hand, the railroads that buy from Wabtec are currently facing higher costs to run their existing fleets, which could make them more cautious about spending on new locomotives in the short term.
Source: Bloomberg Markets and Finance
Diesel prices hit a record high this month, which puts immediate financial pressure on the freight railroads that buy Wabtec's locomotives and parts. When fuel costs spike, railroads often look for ways to cut spending elsewhere to protect their own profits, which can lead them to delay big orders for new equipment.
While high fuel costs are a challenge for the industry, they also make Wabtec's newer, more fuel-efficient locomotives more valuable. If railroads decide to speed up their shift away from older, thirstier engines to save on fuel, this could actually help Wabtec's long-term goal of modernizing the global rail fleet.
Morgan Stanley kept its overweight rating and increased its price target from $318 to $355. This suggests the firm sees about 20 percent more room for the stock to rise from its current price.
The move reflects confidence in the company's ability to grow earnings after it reported sales and profits that came in higher than what analysts expected.
Source: Morgan Stanley
Susquehanna raised its price target from $305 to $340 while keeping its positive rating. The firm is responding to a quarter where the company showed double-digit growth in both sales and adjusted earnings.
This higher target aligns with the company's own decision to raise its financial goals for the rest of the year, signaling that the current momentum in rail equipment and services is expected to continue.
Source: Susquehanna
The company reported adjusted earnings of $2.76 per share, which was better than the $2.60 analysts expected. Revenue grew about 18 percent to $3.18 billion, also topping estimates. This growth was driven by strong execution across both the freight and transit rail businesses.
Management raised its full-year guidance for both sales and earnings, which is a clear sign of confidence in the current demand for rail technology and services. For a company that relies on a large backlog of orders, this kind of performance shows it is successfully turning those future promises into current cash.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Management has built a reliable habit of clearing their own targets. After a few early misses, they have spent the last year and a half consistently outrunning analyst expectations.
| Expectation | |
|---|---|
| EPS | $2.69 |
| Revenue | $3.19B |