Wabtec Corporation (WAB) is strengthening its operations with the help of strategic acquisitions. To this end, Wabtec has inked a deal to acquire Evident’s Inspection Technologies division (Inspection Technologies) for $1.78 billion ($1.68 billion after tax benefits), subject to customary adjustments. The deal is anticipated to be completed by the end of the first half of 2025, subject to customary closing conditions and regulatory approvals.
Headquartered near Boston, MA, Evident’s Inspection Technologies division is known for its innovative product portfolio in advanced automated inspection capabilities. It has a global presence, with a geographically distributed sales force and four engineering and production facilities in North America and Japan. It employs over 1,300 people.
On completion, Inspection Technologies will be added to Wabtec’s Digital Intelligence business.
Nalin Jain, president of Wabtec’s Digital Intelligence Group, stated, “I am incredibly excited to partner with Evident’s talented Inspection Technologies team to further enhance our presence in key markets and applications. Together, we will drive profitable growth, lead in customer value and innovation, and maximize value creation. Inspection Technologies will augment our existing offerings in the rail, mining and industrial sectors while broadening our reach into other high growth, high margin complementary sectors.”
How Will Wabtec Benefit?
The acquisition of Inspection Technologies is anticipated to generate immediate shareholder value with a high single-digit revenue growth outlook, accretive adjusted earnings before interest and taxes margins and accretive return on invested capital over time. Further, the deal is expected to be slightly accretive to adjusted earnings per share in the first year of ownership. The purchase price marks an estimated multiple of 12.0x projected 2025 EBITDA adjusted for transaction and separation costs, anticipated tax benefits, and projected run-rate cost synergies of $25 million.
Backed by a recurring revenue stream of nearly 68%, Inspection Technologies is bringing in a highly stable and predictable revenue base. The deal will also widen Wabtec’s Digital Intelligence business growth opportunities, effectively doubling the size of its total addressable market from almost $8 billion to $16 billion.
Overall, the deal is likely to boost Wabtec's product portfolio and operational excellence, enabling it to deliver superior solutions to customers and increase its business opportunities into high growth industrial markets.
Rafael Santana, president and chief executive officer of Wabtec, stated, “The addition of Inspection Technologies aligns with our growth strategy to accelerate the innovation of scalable technologies, increase our installed base, expand high margin recurring revenues and continuously drive operational performance.”
WAB’s Zacks Rank & Price Performance
Wabtec currently carries a Zacks Rank #3 (Hold).
WAB’s shares have gained 59.2% in the past year, outperforming its industry and the S&P 500, of which the company is a key member.
One-Year Price Comparison
Image Source: Zacks Investment Research
Stocks to Consider
Investors interested in the Zacks Transportation sector may also consider American Airlines AAL and United Airlines UAL, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AAL has an expected earnings growth rate of 45% for the current year. AAL has an impressive earnings surprise history. AAL’s earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average beat of 124.4%.
The Zacks Consensus Estimate of AAL’s 2025 earnings has been revised upward by 32% in the past 90 days. Shares of AAL have risen 39.7% in the past year.
UAL has an expected earnings growth rate of 22% for the current year. The Zacks Consensus Estimate of UAL’s 2025 earnings has been revised upward by 10% in the past 90 days.
UAL has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters. The average beat is 26.9%. Shares of UAL have surged 177.1% in the past 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.
