Wabtec Doing A Little Better Than Expected On Margins In A Swift, Brutal Downturn

It's tough to make much headway as a supplier of equipment for freight and passenger trains when about a third of North American railcars are idled and passengers either don't need to get onto trains (because they're working from home) or just don't want to. And yet, Wabtec (WAB) has managed to generate pretty good decremental margins on a sharp decline in revenue and the backlog really isn't in too bad of shape.

When I last wrote about Wabtec, I said it was "not my favorite industrial", and the shares have risen around 13% since then - less than the S&P and less than other heavy machinery names I liked better including Cummins (CMI) and Deere (DE). Operationally, it's hard not to still prefer a company like Cummins, but that's also an apples-to-grapefruits comparison where Wabtec is concerned. On its own merits, I do believe that Wabtec is undervalued, and that's an increasingly rare thing to find in this market.

 

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Wabtec Doing A Little Better Than Expected On Margins In A Swift, Brutal Downturn