The last 12 months haven't been particularly easy for Wabtec (WAB), but the shares have more or less kept pace with the larger industrial sector, as well as peers/rivals like Caterpillar (CAT) and Knorr-Bremse (KNRRY).
At the same time, management has built some early credibility on its
margin-improvement story, as well as its ability to drive growth from
digital electronics and aftermarket.
Wabtec is not
my favorite industrial, and the freight market is going to remain
challenging for a while, but it's a little strange to me that Wabtec
should trade at a wider discount to fair value than many other heavy
machinery names. I don't see stellar return potential here, but I do see
some relative undervaluation, and I think Wabtec may be poised to
outperform expectations as railroad and transit operations normalize
after the COVID-19 outbreak, leaving some opportunity for upside to
numbers and multiples.
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Margin Improvement, Electronics, And Aftermarket Offer Some Opportunity For Wabtec
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