Wabtec Corporation (WAB) is strengthening its operations with strategic acquisitions. To this end, Wabtec announced the acquisitions of Fanox and Kompozitum. Wabtec is purchasing the two companies for a $110 million cash transaction, financed through cash on hand and a revolving credit facility.
The two companies will join Wabtec’s Transit business (which recently reported third-quarter 2024 net sales of $733 million, up 9.6% year over year due to strong aftermarket sales. The segmental adjusted operating margin increased to 12.8% from 12.5% in the third quarter of 2023).
Pascal Schweitzer, president at Wabtec Transit, stated, “We are excited about bringing the capabilities of Fanox and Kompozitum to our Transit Business. These acquisitions align with our strategy by bringing in technologies that are complementary to our product portfolio, positioning the business for accelerated, profitable revenue growth. It also enhances Wabtec’s mission to provide our customers with next-generation solutions that improve efficiency, performance, and reliability.”
How Will Wabtec Benefit?
The inclusion of Fanox and Kompozitum is expected to be immediately accretive to WAB’s earnings, excluding transaction costs. Additionally, they are likely to enhance WAB’s potential, product portfolio and customer base.
The buyout of Fanox should boost Wabtec’s existing capabilities in the production of relays for on-board train operations and other industrial applications. This is expected to increase customer base and recurring revenues.
The purchase of Kompozitum is likely to strengthen Wabtec’s pantograph portfolio and open new oppurtunities for its carbon and graphite solutions.
WAB’s Zacks Rank & Price Performance
Wabtec currently carries a Zacks Rank #2 (Buy).
WAB shares have gained 57% so far this year, outperforming its industry and the S&P 500, of which the company is a key member.
YTD Price Comparison
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Other Stocks to Consider
Some other top-ranked stocks from the Zacks Transportation sector are C.H. Robinson Worldwide (CHRW) and Expeditors International of Washington, Inc. (EXPD). Each stock presently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CHRW has an impressive earnings surprise history. The company's earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters (missed the mark in the remaining quarter), delivering an average surprise of 10.29%.
CHRW has an expected earnings growth rate of 32.42% for 2024. The Zacks Consensus Estimate for CHRW 2024 earnings has been revised 7.3% upward over the past 90 days. Shares of CHRW have gained 26.2% so far this year.
EXPD has an impressive earnings surprise history. The company's earnings outpaced the Zacks Consensus Estimate in two of the trailing four quarters (missed the mark in the remaining quarter and met in the other quarter), delivering an average surprise of 4.75%.
The Zacks Consensus Estimate for EXPD’s 2024 earnings has been revised 6.4% upward over the past 90 days. EXPD has an expected earnings growth rate of 5.79% for 2024. Shares of EXPD have gained 58.5% so far this year.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
