Track market-moving stories before they get noisy

Key Takeaways Wabtec's Q3 earnings rose 22% to $2.83 per share, beating estimates, while revenues grew 8.1% to $3.12B. Freight and Transit adjusted margins expanded 190 basis points and 260 basis points, respectively, in Q3. WAB's total backlog surged 22.9% to $31.44B, while operating cash flow rose to $455M from $367M. Wabtec Corporation (WAB - Free Report) reported mixed third-quarter 2026 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Both metrics increased year over year, supported by growth across Freight and Transit businesses and improved profitability.

Quarterly earnings (excluding 41 cents from non-recurring items) of $2.83 per share beat the Zacks Consensus Estimate of $2.72 by 4.04% and increased 22% year over year. Revenues climbed 8.1% year over year to $3.12 billion but missed the consensus mark of $3.18 billion by 2%. The 12-month backlog increased 8.8% to $8.99 billion.

Wabtec's Freight Business Delivers Solid GrowthFreight segment revenues increased 6.9% year over year to $2.24 billion. Services revenues rose 6.7% to $794 million, driven by stronger core demand and increased modernization deliveries. Equipment sales edged up 0.3% to $679 million as higher mining sales were largely offset by lower locomotive deliveries.

Digital Intelligence revenues surged 24.2% to $369 million, aided by the Frauscher Sensor Technologies acquisition and robust core digital demand. Components revenues increased 5.3% to $395 million, supported by industrial, maintenance-of-way and international demand. Freight adjusted operating margin expanded 190 basis points to 26.4%, reflecting improved gross margins and operating efficiency.

WAB's Transit Segment Posts Strong Margin GainsTransit segment revenues advanced 11.3% year over year to $883 million. Growth reflected the Dellner Couplers acquisition and higher original equipment and aftermarket sales, partially offset by unfavorable currency movements. On a constant-currency basis, revenues increased 12.5%.

Original equipment revenues rose to $408 million from $367 million, while aftermarket revenues increased to $475 million from $426 million. Transit adjusted operating margin expanded 260 basis points to 18.1%, primarily benefiting from improved gross profitability despite higher operating expenses relative to sales.

Wabtec Benefits From Organic and Acquisition GainsAcquisitions contributed $114 million to third-quarter revenue growth, comprising $49 million from Freight and $65 million from Transit. Organic growth added $137 million, including $102 million from Freight and $35 million from Transit.

Portfolio optimization activities reduced revenues by $12 million, while unfavorable foreign exchange movements lowered sales by $5 million. Organic growth exceeded acquisition contributions, highlighting the role of underlying customer demand alongside strategic investments in expanding Wabtec's business.

WAB Expands Consolidated Operating ProfitabilityAdjusted gross margin improved 180 basis points year over year to 37.4%, while adjusted operating margin expanded 190 basis points to 22.9%. Adjusted operating income increased to $715 million from $607 million, supported by higher sales, favorable product mix and productivity improvements.

GAAP operating income climbed to $625 million from $491 million, with operating margin expanding 300 basis points to 20%. Benefits from cost recovery, manufacturing efficiencies and Integration 3.0 savings helped offset higher raw material costs, tariffs and acquisition-related expenses. Selling, general and administrative expenses increased to $383 million from $375 million.

Wabtec's Backlog Strengthens Revenue VisibilityTotal backlog reached $31.44 billion as of Sept. 30, 2026, up 22.9% from $25.58 billion a year earlier. Freight backlog increased to $25.77 billion, while Transit backlog reached $5.67 billion, reflecting continued order momentum across both businesses.

The 12-month backlog grew $725 million year over year. Freight accounted for $6.54 billion of near-term orders, while Transit represented $2.45 billion. Recent orders included $1 billion in international locomotive and service contracts and $633 million in North American locomotive and modernization orders.

WAB Generates Higher Operating Cash FlowCash from operations increased to $455 million from $367 million in the prior-year quarter, primarily driven by higher net income. Operating cash flow conversion stood at 82% compared with 83% a year earlier.

Wabtec ended the quarter with $489 million in cash, cash equivalents and restricted cash. Total available liquidity was $2.09 billion, including $1.61 billion available under existing credit facilities. Total debt stood at $6.38 billion. During the quarter, Wabtec repurchased $305 million of shares and paid $52 million in dividends.

WAB Raises 2026 Earnings OutlookWabtec raised and tightened its full-year 2026 adjusted earnings guidance to $10.85-$11.05 per share from the previous $10.60-$10.90 range. The midpoint increased 20 cents and represents expected year-over-year growth of approximately 22%. The Zacks Consensus Estimate for 2026 earnings is currently pegged at $10.89 per share, below the midpoint of the guided range.

The company maintained its 2026 revenue guidance at $12.30-$12.60 billion, implying growth of approximately 11.5% at the midpoint. The outlook assumes continued operating margin expansion, productivity improvements and benefits from Integration 3.0 and portfolio optimization initiatives. The Zacks Consensus Estimate for 2026 revenues is currently pegged at $12.53 billion.

Currently, Wabtec carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Q3 Performance of Another Transportation CompanyDelta Air Lines (DAL - Free Report) reported third-quarter 2026 earnings (excluding 57 cents from non-recurring items) of $1.72 per share, missing the Zacks Consensus Estimate of $1.80 by 4.44%. Earnings increased year over year despite sharply higher fuel costs and rising non-fuel expenses.

Adjusted revenues climbed 16% year over year to $17.59 billion but missed the consensus estimate of $17.74 billion by 0.9%. Broad demand strength and healthy yields lifted adjusted total revenue per available seat mile, or TRASM, 15%, while premium and diversified revenue streams continued to expand.

Upcoming Earnings Release of a Transportation CompanyUnion Pacific (UNP - Free Report) is scheduled to report third-quarter 2026 earnings on Oct. 22. The Zacks Consensus Estimate for third-quarter 2026 earnings has been revised 2.1% upward over the past 60 days.

UNP’s earnings beat the Zacks Consensus Estimate in three of the preceding four quarters (missing the mark on the other occasion). The average beat is 2.8%. Improvement in the freight scenario is expected to aid results.

Key Takeaways Wabtec's $700M-plus Guinea rail services deal lifts its Simandou-related business beyond $1.2 billion.WAB's second-quarter revenues rose 17.5%, while its multi-year backlog surged 41.7% to $30.93 billion.WAB's 41.6% annual stock gain and 23.4X forward P/E highlight strong momentum but also valuation risks. Westinghouse Air Brake Technologies Corporation, operating as Wabtec Corporation (WAB - Free Report) , is strengthening its position in the global rail industry, supported by expanding service capabilities and rising opportunities in international markets. Its recent agreement worth more than $700 million with La Compagnie du TransGuinéen (CTG) underscores the company's growing presence in Africa and strengthens its long-term revenue prospects.

The agreement, Wabtec's largest services contract in Africa, covers maintenance, parts management, logistics, workforce training and remote diagnostics for locomotives operating along Guinea's 600-kilometer TransGuinean Railway. Combined with earlier locomotive orders, the deal takes Wabtec's Simandou-related business beyond $1.2 billion.

With the company securing long-duration service contracts and benefiting from rail infrastructure investments, investors may wonder whether WAB's growth prospects justify buying the stock despite its substantial share-price appreciation and premium valuation.

WAB's Strong Price Performance Reflects Investor ConfidenceWAB's shares have gained 41.6% over the past year, significantly outperforming the Zacks Transportation - Equipment and Leasing industry's 9% rise and the S&P 500's 17.8% increase. The substantial outperformance reflects investors' confidence in the company's growth potential and its ability to capitalize on sustained demand for rail equipment and services.

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WAB's Services Expansion Strengthens Growth ProspectsWabtec's expanding services portfolio is a key growth driver, supported by rising demand for locomotive modernization, maintenance and advanced rail technologies. The CTG agreement strengthens its long-term lifecycle services business, improving revenue visibility and customer relationships.

In the second quarter of 2026, revenues increased 17.5% year over year to $3.18 billion, while adjusted earnings per share (EPS) rose 21.6% to $2.76. Adjusted operating margin expanded 80 basis points to 21.9%. Wabtec's multi-year backlog rose 41.7% to $30.93 billion, while its 12-month backlog grew 11.3% to $9.14 billion, providing solid revenue visibility and supporting future growth.

Caterpillar (CAT - Free Report) , through its Progress Rail business, competes with Wabtec in locomotive manufacturing, maintenance and related services. Caterpillar's emphasis on lifecycle services and predictive maintenance underscores the growing importance of technology-enabled aftermarket solutions. While competition from Caterpillar remains significant, Wabtec's integrated offerings and long-term contracts strengthen its ability to capitalize on rising rail infrastructure investments.

Similarly, Greenbrier Companies (GBX - Free Report) provides railcar manufacturing, fleet management and maintenance services, highlighting the industry's focus on extending equipment life and improving operational efficiency. Greenbrier's diversified rail solutions reflect the opportunities arising from sustained infrastructure investments. Wabtec's expanding international presence and growing services portfolio position it to benefit from similar industry trends alongside Greenbrier Companies.

Wabtec's financial flexibility also supports investments and shareholder returns. During the second quarter, operating cash flow reached $441 million compared with $209 million a year earlier. The company repurchased $215 million in shares and distributed $53 million in dividends. Management raised its 2026 revenue guidance to $12.30–$12.60 billion and adjusted EPS outlook to $10.60-10.90, reflecting confidence in its operational momentum.

However, challenges persist. The complexity of servicing locomotives across demanding operating environments, potential project execution delays and competitive pressures could affect profitability. Moreover, integrating acquisitions and maintaining service standards across international markets will require disciplined execution. These factors warrant monitoring despite Wabtec's encouraging fundamentals.

WAB's Premium Valuation Warrants AttentionWAB currently trades at 23.4 times forward 12-month earnings, above the industry average of 14.59 times. This substantial premium suggests investors have already priced in considerable growth expectations.

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Although Wabtec's strong backlog, earnings momentum and growing services portfolio support a higher valuation, limited room for execution setbacks could heighten downside risks. Sustained earnings growth will be essential to justify the stock's premium.

Positive Earnings Estimate Revisions Reinforce WAB's OutlookThe Zacks Consensus Estimate for 2026 earnings is pegged at $10.89 per share, up 0.09% over the past 60 days. The 2027 consensus estimate has increased 0.32% to $12.43 per share during the same period.

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The upward revisions, although modest, signal improving earnings expectations, complementing Wabtec's strengthening order pipeline and favorable operating outlook.

Should Investors Buy WAB Stock Now?Wabtec's expanding rail services business, highlighted by its landmark CTG agreement, enhances long-term revenue visibility and strengthens its international presence. Robust backlog growth, margin expansion, healthy cash generation and positive earnings estimates further reinforce its investment appeal.

Although the stock's premium valuation and operational challenges warrant caution, its favorable growth prospects and Zacks Rank #2 (Buy) support a positive investment stance. Investors seeking exposure to long-term rail infrastructure investment and recurring aftermarket revenues may consider buying WAB stock, while remaining mindful of valuation-related volatility. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

It has been about a month since the last earnings report for Westinghouse Air Brake Technologies (WAB - Free Report) . Shares have lost about 1.9% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Wabtec due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important catalysts.

Wabtec Q2 Earnings Beat EstimatesQuarterly adjusted earnings of $2.76 per share beat the Zacks Consensus Estimate of $2.63 by 4.9% and increased 21.6% year over year, owing to higher sales and operating margin expansion. Revenues climbed 17.5% to $3.18 billion and surpassed the consensus mark of $3.08 billion by 3.2%. Growth across Freight and Transit, supported by acquisitions and organic expansion, drove the top line. The 12-month backlog increased 11.3% to $9.14 billion.

WAB's Freight Segment Drives Broad-Based GrowthFreight segment revenues increased 16.9% year over year to $2.24 billion. Equipment sales rose 35% to $737 million on higher locomotive deliveries, while Digital Intelligence sales surged 88.5% to $360 million, aided by the acquisitions of Inspection Technologies and Frauscher Sensor Technologies.

Services revenues declined 4.2% to $748 million because of lower modernization deliveries, as expected. Components revenues were nearly flat at $398 million. Freight-adjusted operating margin improved 80 basis points to 25.8%, reflecting better gross margins despite higher operating expenses as a percentage of sales.

Wabtec's Transit Business Posts Margin ExpansionTransit segment revenues rose 18.9% to $936 million. The increase reflected the Dellner Couplers acquisition, higher original equipment and aftermarket sales and favorable foreign currency movements. On a constant-currency basis, segment sales advanced 17.7%.

Original equipment revenues grew to $411 million from $353 million, while aftermarket revenues increased to $525 million from $434 million. Adjusted operating margin expanded 250 basis points to 17.7%, supported by improved gross profitability.

WAB Benefits From Acquisition and Organic GainsAcquisitions contributed $232 million to second-quarter sales growth, including $163 million in Freight and $69 million in Transit. Organic growth added another $229 million, split between $158 million in Freight and $71 million in Transit.

Favorable foreign exchange contributed $24 million, while portfolio optimization actions reduced revenues by $12 million. The mix shows that Wabtec’s growth was not solely acquisition-driven, as underlying demand also made a meaningful contribution.

Wabtec Expands Consolidated ProfitabilityAdjusted gross margin increased 190 basis points to 36.7%, while adjusted operating margin improved 80 basis points to 21.9%. Robust sales growth and stronger gross margins supported profitability across the organization.

WAB's Backlog Supports Revenue VisibilityTotal backlog reached $30.93 billion as of June 30, 2026, up 41.7% from $21.83 billion a year earlier. Freight backlog increased to $25.33 billion, while Transit backlog rose to $5.60 billion.

The 12-month backlog grew by $930 million year over year. Freight accounted for $6.64 billion of the near-term backlog, while Transit represented $2.50 billion. This order coverage provides visibility into production and service activity across both core businesses.

Wabtec Generates Stronger Operating Cash FlowCash from operations increased to $441 million from $209 million in the prior-year quarter. Operating cash flow conversion improved to 82% from 46%, aided by higher net income and favorable working-capital movements.

Wabtec ended the quarter with $670 million in cash, cash equivalents and restricted cash. Total available liquidity was $2.02 billion, including $1.36 billion available under existing credit facilities. Total debt stood at $6.57 billion, including $4.92 billion of long-term debt.

During the reported quarter, Wabtec repurchased $215 million of shares and paid $53 million in dividends.

Outlook RaisedApart from the better-than-expected results, Wabtec has raised its full-year 2026 guidance. The company raised its 2026 adjusted earnings guidance to $10.60-$10.90 per share from the previous $10.25-$10.65 range. The midpoint increased by 30 cents and represents expected year-over-year growth of approximately 19.9%.  The company also raised its 2026 revenue guidance to a range of $12.30-$12.60 billion from the prior view of $12.19-$12.49 billion. The midpoint rose by $110 million and implies growth of approximately 11.5% from 2025. 

How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a downward trend in fresh estimates.

VGM ScoresCurrently, Wabtec has a average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock has a score of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Wabtec has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Key Takeaways Wabtec will report Q2 2026 results on July 22, with earnings and sales seen rising year over year. Freight and Transit revenues are projected to grow 4.9% and 6.65%, respectively, from a year earlier. Higher costs may pressure results, while robust services, aftermarket and OEM demand may support sales. Westinghouse Air Brake Technologies (WAB - Free Report) , operating as Wabtec Corporation, is scheduled to report second-quarter 2026results on July 22, before market open.

The Zacks Consensus Estimate for WAB’s second-quarter 2026 earnings has remained flat at $2.63 per share over the past 60 days. The consensus mark for earnings implies a 15.9% upside from the year-ago actual. The consensus estimate for sales (currently pegged at $3.08 billion) suggests a 13.8% uptick from the year-ago actual.

Wabtec has an encouraging earnings surprise history. The company’s earnings have outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 3.97%.

Factors Likely to Have Influenced WAB's Q2 PerformanceWe expect Wabtec's performance in the to-be-reported quarter to have been adversely affected by higher operating expenses. Persistent geopolitical tensions in the Middle East and ongoing supply-chain disruptions are also likely to have pressured the company's bottom line.

Conversely, WAB's top-line performance in the to-be-reported quarter is expected to have benefited from stronger demand for services and components, supported by solid sales across both the aftermarket and original equipment manufacturing (OEM) channels.

The Zacks Consensus Estimate for Freight revenues is pegged at $2.19 billion, implying 4.9% growth from the prior-year reported figure. The consensus mark for Transit revenues is pinned at $839.37 million, indicating 6.65% growth from the prior-year reported figure.

What Our Model Says About WABOur proven model does not conclusively predict an earnings beat for Wabtec this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Wabtec has an Earnings ESP of 0.00% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Highlights of WAB’s Q1 ResultsWAB reported encouraging first-quarter 2026 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate and increased year over year.

Quarterly earnings per share of $2.71 beat the Zacks Consensus Estimate of $2.55 and improved 18.9% year over year, driven by higher sales and non-operational benefits primarily related to currency fluctuation and the timing of tax expense. Revenues of $2.95 billion outpaced the Zacks Consensus Estimate of $2.93 billion and grew 13% year over year.

Stocks to ConsiderHere are a few stocks from the broader Zacks Transportation sector that investors may consider, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.

Expeditors International of Washington (EXPD - Free Report)  has an Earnings ESP of +2.00% and a Zacks Rank #2 at present.

EXPD is set to report second-quarter 2026 earnings on Aug. 4. The Zacks Consensus Estimate for Expeditors’ second-quarter 2026 earnings has been revised 2.52% upward over the past 60 days. EXPD’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, delivering an average beat of 13.96%.

Schneider National (SNDR - Free Report) has an Earnings ESP of +3.76% and a Zacks Rank #2 at present. SNDR is scheduled to report second-quarter 2026 earnings on July 30.

The Zacks Consensus Estimate for second-quarter 2026 earnings has remained flat at 22 cents over the past 60 days. SNDR’s earnings beat the Zacks Consensus Estimate in one of the preceding four quarters (missing the mark twice and met the mark once in the remaining three quarters). The average miss is 17.97%.