Westinghouse Air Brake Technologies Corp (NYSE: WAB)

Sector: Industrials Industry: Railroads CIK: 0000943452
Market Cap 44.42 Bn
P/B 3.99
P/E 37.97
P/S 3.98
ROIC (Qtr) 7.59
Div Yield % 0.39
Rev 1y % (Qtr) 14.79
Total Debt (Qtr) 5.54 Bn
Debt/Equity (Qtr) 0.50
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About

Westinghouse Air Brake Technologies Corporation, widely known as Wabtec, operates in the freight rail and passenger transit industries, providing technology-based locomotives, equipment, systems, and services. The company boasts a rich history dating back to 1869 and has grown through strategic acquisitions to become a global entity with operations in over 50 countries and a workforce of approximately 29,000 employees. Wabtec's business activities span across two main segments: the Freight Segment and the Transit Segment. The Freight Segment, which...

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Investment thesis

Bull case

  • Operating cash flow of 1.76B provides exceptional 135.31x coverage of minority interest expenses 13M, showing strong core operations.
  • Operating cash flow of 1.76B provides strong 21.99x coverage of stock compensation 80M, indicating sustainable incentive practices.
  • Robust free cash flow of 1.50B exceeds capital expenditure of 255M by 5.90x, indicating strong organic growth funding capability.
  • Robust tangible asset base of 8.02B provides 14.73x coverage of working capital 544M, indicating strong operational backing.
  • Operating cash flow of 1.76B fully covers other non-current liabilities 1.44B by 1.22x, showing strong long-term stability.

Bear case

  • Operating cash flow of 1.76B barely covers its investment activities of (2.75B), with a coverage ratio of -0.64, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 789M against inventory of 2.75B, the 0.29 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 1.76B provides thin coverage of dividend payments of (173M) with a -10.17 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Investment activities of (2.75B) provide weak support for R&D spending of 223M, which is -12.32x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 789M provide limited coverage of acquisition spending of (2.49B), which is -0.32x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.

Segments Breakdown of Revenue (2025)

Segments Breakdown of Revenue (2025)

Peer comparison

Companies in the Railroads
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 UNP Union Pacific Corp 156.32 Bn 21.90 6.38 32.55 Bn
2 NSC Norfolk Southern Corp 98.17 Bn 49.09 8.45 17.09 Bn
3 CP Canadian Pacific Kansas City Ltd/Cn 77.60 Bn 25.11 7.13 17.31 Bn
4 CSX Csx Corp 76.97 Bn 26.64 5.46 18.87 Bn
5 CNI Canadian National Railway Co 67.54 Bn 19.60 5.35 15.71 Bn
6 WAB Westinghouse Air Brake Technologies Corp 44.42 Bn 37.97 3.98 5.54 Bn
7 TRN Trinity Industries Inc 2.81 Bn 29.44 1.29 5.94 Bn
8 GBX Greenbrier Companies Inc 0.96 Bn -16.79 0.84 1.77 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.23 1.36
EV to Cash from Ops. EV/CFO 27.96 16.53
EV to Debt EV to Debt 8.88 2.59
EV to EBIT EV/EBIT 27.26 7.63
EV to EBITDA EV/EBITDA 21.86 18.51
EV to Free Cash Flow [EV/FCF] EV/FCF 32.70 28.00
EV to Market Cap EV to Market Cap 1.11 1.04
EV to Revenue EV/Rev 4.40 2.75
Price to Book Value [P/B] P/B 3.99 3.50
Price to Earnings [P/E] P/E 37.97 21.48
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 6.76 2.51
Dividend Payout Ratio % Div Payout % (Qtr) 14.60 22.50
Dividend per Basic Share Div per Share (Qtr) 1.00 1.27
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 11.34 15.26
Interest Coverage Int. cover (Qtr) 8.02 0.60
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -31.44 -6.16
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 10.35 35.27
Dividend Growth (1y) % Div 1y % (Qtr) 25.00 3.76
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 10.68 17.20
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 8.80 -15.55
EBIT Growth (1y) % EBIT 1y % (Qtr) 12.75 18.03
EBT Growth (1y) % EBT 1y % (Qtr) 12.87 15.09
EPS Growth (1y) % EPS 1y % (Qtr) 13.06 15.15
FCF Growth (1y) % FCF 1y % (Qtr) -8.29 426.49
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 13.07 -4.94
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.51 0.57
Cash Payout Ratio Cash Payout (Qtr) 0.09 0.16
Cash Ratio Cash Ratio (Qtr) 0.15 0.90
Current Ratio Curr Ratio (Qtr) 1.11 1.61
Debt to Equity Ratio Debt/Equity (Qtr) 0.50 1.04
Interest Cover Ratio Int Coverage (Qtr) 8.02 0.60
Times Interest Earned Times Interest Earned (Qtr) 8.02 0.60
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 20.20 -101.68
EBIT Margin % EBIT Margin % (Qtr) 16.15 -107.52
EBT Margin % EBT Margin % (Qtr) 14.14 -114.27
Gross Margin % Gross Margin % (Qtr) 34.10 37.55
Net Profit Margin % Net Margin % (Qtr) 10.50 -117.34