2 Reasons to Like WAB and 1 to Stay Skeptical

October 07, 2025 at 00:04 AM EDT

WAB Cover Image

Although Wabtec (currently trading at $203.18 per share) has gained 25.9% over the last six months, it has trailed the S&P 500’s 33.2% return during that period. This was partly due to its softer quarterly results and may have investors wondering how to approach the situation.

Given the relatively weaker price action, is now a good time to buy WAB? Or are investors better off allocating their money elsewhere?

Why Does WAB Stock Spark Debate?

Also known as Wabtec, Westinghouse Air Brake Technologies (NYSE: WAB) provides equipment, systems, and related software for the railway industry.

Two Positive Attributes:

1. Operating Margin Rising, Profits Up

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

Analyzing the trend in its profitability, Wabtec’s operating margin rose by 6.4 percentage points over the last five years, as its sales growth gave it operating leverage. Its operating margin for the trailing 12 months was 16.2%.

Wabtec Trailing 12-Month Operating Margin (GAAP)

2. Outstanding Long-Term EPS Growth

We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

Wabtec’s EPS grew at a spectacular 16% compounded annual growth rate over the last five years, higher than its 5.6% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

One Reason to be Careful:

Slow Organic Growth Suggests Waning Demand In Core Business

We can better understand Heavy Transportation Equipment companies by analyzing their organic revenue. This metric gives visibility into Wabtec’s core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement.

Over the last two years, Wabtec’s organic revenue averaged 7.5% year-on-year growth. This performance slightly lagged the sector and suggests it may need to improve its products, pricing, or go-to-market strategy, which can add an extra layer of complexity to its operations. Wabtec Organic Revenue Growth

Final Judgment

Wabtec has huge potential even though it has some open questions. With its shares trailing the market in recent months, the stock trades at 28× forward EV-to-EBITDA (or $203.18 per share). Is now a good time to initiate a position? See for yourself in our comprehensive research report, it’s free for active Edge members .

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