WAB Intrinsic Value Calculation – WABT Making Progress, But Valuation a Worry
December 20, 2023
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Westinghouse Air Brake ($NYSE:WAB) Technologies (WABT) has made progress in recent times, but its high valuation has been a cause for concern. WABT is a leading provider of technology-based equipment, services, and systems for the rail industry, focused on helping improve the safety, efficiency, and productivity of freight and passenger rail operations. Despite its growth and success in the industry, the stock has seen its valuation come into question. This has been driven by a surge of investor activity, buoyed by the company’s impressive financial results in recent quarters. Although the stock has provided strong returns so far, many analysts wonder whether or not the current pricing is sustainable. There is no doubt that WABT is on the right track with its innovative products and solutions.
However, many investors are worried that the current pricing is not reflective of the company’s potential and are concerned that it won’t be able to sustain its gains in the long run. For now, investors will have to wait and see how the situation plays out before making any decisions about how to proceed with the company’s stock.
Stock Price
WESTINGHOUSE AIR BRAKE TECHNOLOGIES (WABT) made some progress on Tuesday, as the stock opened at $123.2 and closed at $125.9, representing a 2.6% gain from the last closing price of $122.7. Despite the positive performance, many investors are still hesitant to buy into the stock due to its relatively high valuation. WABT is currently priced at a premium compared to similar stocks in the market. Despite the premium valuation, the company’s impressive track record of innovation has kept it attractive to investors. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for WAB. More…
| Total Revenues | Net Income | Net Margin |
| 9.46k | 758 | 8.0% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for WAB. More…
| Operations | Investing | Financing |
| 925 | -422 | -636 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for WAB. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 18.8k | 8.43k | 57.64 |
Key Ratios Snapshot
Some of the financial key ratios for WAB are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 6.2% | 14.2% | 13.1% |
| FCF Margin | ROE | ROA |
| 7.9% | 7.5% | 4.1% |
Analysis – WAB Intrinsic Value Calculation
At GoodWhale, our team of analysts has put together an analysis of WESTINGHOUSE AIR BRAKE TECHNOLOGIES’ financials. After a thorough review of the company’s performance and outlook, we believe that the fair value of the share should be around $109.4. This figure was derived from our proprietary Valuation Line model, which incorporates quantitative and qualitative analysis to establish a fair price for stocks. At the time of writing, the current stock price for WESTINGHOUSE AIR BRAKE TECHNOLOGIES stands at $125.9, which is 15.1% overvalued in comparison to our fair value assessment. We recommend that investors revisit their decision to buy into the stock at these levels and consider other options in the market if they are looking for returns. More…
Peers
The competition between Westinghouse Air Brake Technologies Corp and its competitors is fierce. Each company is trying to gain market share and improve their bottom line. ENAV SpA is a leading provider of air navigation services. Forward Air Corp is a leading provider of logistics and transportation services. Getlink SE is a leading provider of rail transportation services.
– ENAV SpA ($LTS:0RIE)
ENAV SpA is an air navigation service provider based in Italy. The company offers a wide range of services including air traffic management, air traffic control, and aviation consulting. ENAV also provides ground-based services such as training, simulation, and support. In addition, the company operates a network of air traffic control towers and radar stations across Italy.
ENAV’s market capitalization is 1.99 billion as of 2022. The company has a return on equity of 7.25%. ENAV is a leading provider of air navigation services in Italy and offers a comprehensive range of services to the aviation industry.
– Forward Air Corp ($NASDAQ:FWRD)
Founded in 1986, Forward Air Corporation is a publicly traded (Nasdaq: FWRD) company based in Greeneville, TN. The Company’s diversified group of businesses is primarily focused on the airfreight and logistics industries. Forward Air operates in two segments: Forward Air Solutions (FAS) and Forward Air Inc. (FAI). FAS provides surface transportation and related logistics services to the North American airfreight and heavyweight ground market. FAI offers regional, intermodal and pool distribution services to the airfreight market.
– Getlink SE ($OTCPK:GRPTF)
Getlink is a French company that operates the Channel Tunnel, connecting England and France. The company has a market capitalization of 8.27 billion as of 2022 and a return on equity of 4.05%. Getlink is a transportation company that provides rail, maritime, and road transportation services. The company also provides logistics and passenger services.
Summary
Westinghouse Air Brake Technologies (WAB) has been performing well, with its stock price rising over the past year. The company’s strong balance sheet and cash flow have enabled WAB to make strategic and tactical acquisitions that have strengthened its competitive position. Despite this, investors should be cautious when considering investing in WAB. The company’s valuation is relatively high compared to its peers, and its dividend yield is low.
Additionally, there are some potential headwinds in the form of softening demand for railroad services, along with the disruption caused by recent changes to U.S. rail regulations. Investors should conduct thorough research into WAB before making an investment decision.
