Wabtec Has To Re-Earn Its Premium, But Valuation Seems Low Relative To Near-Term Expectations

Wabtec (WAB) has certainly lost the benefit of the doubt it enjoyed for so many years, at least in terms of how the market viewed its growth potential and the multiples that growth potential was worth. Between worries about the quality of the business it acquired from GE (GE), management’s ability to integrate the deal, and underlying market/business trends in both freight and transit, expectations are certainly quite a bit lower now than a year or so ago, and the shares have lost about a third of their value since my last article on the company in early October.

Although I think there are still valid arguments for a fair value above $90, there’s a lot that Wabtec has to prove before that will resonate with the Street, and Wabtec needs to deliver some clean quarters before the market will pay 12x or more for forward EBITDA.

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Wabtec Has To Re-Earn Its Premium, But Valuation Seems Low Relative To Near-Term Expectations