# Wabtec (WAB) Sector: Railroad equipment and services | Field | Value | |---|---| | Price | $303.49 | | Market cap | $51B | | Intrinsic value source | AI estimate | | Data as of | 2026-11-11 | | Next earnings | 2027-02-10 (estimate) | Analysts: Bullish Picks: Research only Discount category: Far above intrinsic value ## In short Wabtec trades above the AI estimate because investors pay for its fast earnings growth and large backlog, and only steady backlog conversion with higher margins in 2027 can support this price. ## Themes and gap - Themes: Tariffs and trade (trade-tariffs), High debt (leverage) - Gap type: Can close (closable) - Why: The 2027 guidance in February 2027 and the quarterly reports in 2027 show whether the backlog turns into sales at higher margins. ## About Westinghouse Air Brake Technologies Corporation (Wabtec) makes equipment, systems, digital products and services for freight and passenger railroads, and for mining, marine and industrial markets. Its Freight segment sells locomotives, services and modernizations, components and digital products such as train control, signaling and inspection technology. Its Transit segment sells equipment, components and services for passenger trains and transit systems. Sales were $11.17 billion in 2025 and $3.12 billion in Q3 2026. Wabtec bought Evident's Inspection Technologies division in July 2025, Frauscher Sensor Technology in December 2025 and Dellner Couplers in February 2026. The total backlog was $31.4 billion at September 30, 2026. The head office is in Pittsburgh, Pennsylvania. Rafael Santana is Chairman and Chief Executive Officer. ## Thesis Wabtec trades above the AI estimate because investors pay for its fast earnings growth, but its earnings depend on large locomotive orders and on rail activity in North America. Adjusted EPS rose 22.0% in Q3 2026 and the total backlog rose to $31.4 billion, but locomotive deliveries fell in the quarter and North American rail car builds were lower. The fast growth of 2025 and 2026 can still slow. For the price to hold, three things must be true. The multi-year backlog must turn into sales at good margins. Services, digital products and the bought businesses must keep growing. And the adjusted operating margin must keep rising from 22.9% in Q3 2026 while Wabtec pays down the debt from its purchases. The Q4 2026 report with the 2027 guidance, expected in February 2027, is the next test. ## Checkpoints - Oct 21, 2026: Q3 2026 results: margin and guidance. Status: Passed. Watch: A higher adjusted operating margin with unchanged or higher 2026 guidance passes; a cut fails. Outcome: The adjusted operating margin rose 1.9 points to 22.9%, and Wabtec raised its adjusted EPS guidance to $10.85 to $11.05. - Feb 10, 2027 (estimate): Q4 2026 results and 2027 guidance. Status: Pending. Watch: 2027 guidance for adjusted EPS growth of about 10% or more passes; lower growth fails. - Apr 2027 (estimate): Q1 2027 results: backlog and margin. Status: Pending. Watch: Sales growth with a higher adjusted operating margin and a stable 12-month backlog passes; a falling backlog or margin fails. ## Valuation The intrinsic value for Wabtec is an AI estimate from November 11, 2026. It is not an analyst's value. An AI research agent calculated it from Wabtec's filings. The method is a multiple of 2027 adjusted EPS. Adjusted EPS excludes non-cash amortization expense, which was $0.39 per share in Q3 2026, and restructuring and acquisition costs. The 2025 release (8-K, February 11, 2026) gives 2025 sales of $11.17 billion and adjusted EPS of $8.97. The Q3 2026 release (8-K, October 21, 2026) gives sales of $3.12 billion, adjusted EPS of $2.83, adjusted EPS of $8.29 for the first nine months, an adjusted operating margin of 22.9%, a 12-month backlog of $8,992 million, a total backlog of $31,435 million, total debt of $6.38 billion, and 2026 guidance for sales of $12.30 billion to $12.60 billion and adjusted EPS of $10.85 to $11.05. The Form 10-Q for the quarter ended September 30, 2026 gives 167,802,384 shares at October 16, 2026. EPS is after interest, so the estimate makes no debt adjustment. The estimate assumes 2026 adjusted EPS of about $10.95. The 2027 EPS and the multiples are assumptions. The low case assumes fewer locomotive deliveries and weak North American rail car builds, with 2027 adjusted EPS of $11.40, at 18 times. It gives $205.20 per share. The base case assumes that the backlog turns into sales and the margin rises a little, with adjusted EPS of $12.20, at 21 times. It gives $256.20 per share. The high case assumes strong orders, growth in digital products and more repurchases, with adjusted EPS of $12.90, at 24 times. It gives $309.60 per share. The estimate assumes weights of 25%, 50% and 25%. The weighted intrinsic value is $256.80 per share. Switching costs and intangible assets are the main sources of the advantage. Railroads buy services, parts and modernizations for the locomotives and systems that Wabtec built, and Freight services sales rose 6.7% in Q3 2026. Its brake, train control and signaling products must meet strict safety rules, and a new supplier needs many years to prove them. But locomotive orders come in large contracts that rivals also bid for, and rail car builds move in cycles. The estimate expects the advantage to last 10 years or more, but not 20 years. As of 2026-11-11. Sources: - https://www.sec.gov/Archives/edgar/data/943452/000094345226000017/a3q26pressreleaseword.htm - https://www.sec.gov/Archives/edgar/data/943452/000162828026066629/wab-20260930.htm - https://www.sec.gov/Archives/edgar/data/943452/000162828026007113/a4q2025pressrelease.htm ## Balance sheet - Cash: $480M - Debt: $6.4B - Net debt: $5.9B - Undrawn credit line: $1.6B - Debt due within 12 months: $1.7B Wabtec funds its business with senior notes, bank credit facilities and cash flow. At September 30, 2026, total debt was $6,379 million, of which $1,714 million was due within 12 months, and cash and cash equivalents were $0.48 billion. Total available liquidity was $2.09 billion, including $1.61 billion available under credit facilities. The 2025 Credit Agreement has a revolving credit facility of up to $2.0 billion. On October 1, 2026, Wabtec started a commercial paper program of up to $2.0 billion, and on November 4, 2026, it issued $500 million of 5.900% notes due 2037. Cash from operations was $455 million in Q3 2026. In the same quarter, Wabtec repurchased $305 million of shares and paid $52 million of dividends, and the quarterly dividend was $0.31 per share. At October 16, 2026, there were 167,802,384 shares. As of 2026-09-30. Sources: - https://www.sec.gov/Archives/edgar/data/943452/000162828026066629/wab-20260930.htm - https://www.sec.gov/Archives/edgar/data/943452/000094345226000017/a3q26pressreleaseword.htm - https://www.sec.gov/Archives/edgar/data/943452/000114036126041966/ef20084907_8k.htm ## Dividends - Dividend yield: 0.3% (last 12 months, at the current price) - Paid per share, last 12 months: $0.93 (3 payments) - Current annual rate: $1.24 ($0.31 x 4 a year) - Payout ratio: 15% of the earnings of the last fiscal year (the year ended 2025-12-31) - Latest ex-dividend date: 2026-08-18, $0.31 per share - Growth from 2020 to 2025: 15.8% a year - Growth from 2015 to 2025: 13.6% a year Dividends per share by year: 2016: $0.36, 2017: $0.44, 2018: $0.48, 2019: $0.48, 2020: $0.48, 2021: $0.48, 2022: $0.60, 2023: $0.68, 2024: $0.80, 2025: $1.00. Source: company filings and market data, read on 2026-11-13. ## Recent events - 2026-11-04: Wabtec issued $500 million of 5.900% senior notes due 2037. - 2026-10-21: Wabtec reported Q3 2026 results. Sales rose 8.1% to $3.12 billion, GAAP EPS rose 33.7% to $2.42, and adjusted EPS rose 22.0% to $2.83. Wabtec raised and narrowed its 2026 adjusted EPS guidance to $10.85 to $11.05 and kept sales guidance of $12.30 billion to $12.60 billion. It repurchased $305 million of shares in the quarter. - 2026-07-22: Wabtec reported Q2 2026 results and raised its 2026 guidance to sales of $12.30 billion to $12.60 billion and adjusted EPS of $10.60 to $10.90. - 2026-02-11: Wabtec reported 2025 results, with sales of $11.17 billion and adjusted EPS of $8.97. It gave 2026 guidance for adjusted EPS of $10.05 to $10.45, raised the quarterly dividend by 24% and raised its share repurchase authorization to $1.2 billion. - 2026-02-10: Wabtec bought Dellner Couplers, a maker of train connection systems for passenger trains, for about $1.053 billion. ## Latest news and filings - Last earnings: 2026-10-21 (8-K: https://www.sec.gov/Archives/edgar/data/943452/000094345226000017/) - Next earnings: 2027-02-10 (expected; the company has not confirmed it) | Filed | Form | Headline | Period end | XBRL document | Link | | --- | --- | --- | --- | --- | --- | | 2026-11-04 | 8-K | New material agreement and New debt or financial obligation | | | https://www.sec.gov/Archives/edgar/data/943452/000114036126041966/ef20084907_8k.htm | | 2026-11-03 | 8-K | Other company news | | | https://www.sec.gov/Archives/edgar/data/943452/000114036126041841/ef20084613_8k.htm | | 2026-10-21 | 10-Q | Quarterly report for the period ended Sep 30, 2026 | 2026-09-30 | wab-20260930 | https://www.sec.gov/Archives/edgar/data/943452/000162828026066629/wab-20260930.htm | | 2026-10-21 | 8-K | Earnings release and Investor disclosure | | wab-20261021 | https://www.sec.gov/Archives/edgar/data/943452/000094345226000017/ | | 2026-10-01 | 8-K | New debt or financial obligation | | wab-20261001 | https://www.sec.gov/Archives/edgar/data/943452/000094345226000013/wab-20261001.htm | | 2026-07-22 | 10-Q | Quarterly report for the period ended Jun 30, 2026 | 2026-06-30 | wab-20260630 | https://www.sec.gov/Archives/edgar/data/943452/000162828026049139/wab-20260630.htm | | 2026-07-22 | 8-K | Earnings release and Investor disclosure | | wab-20260722 | https://www.sec.gov/Archives/edgar/data/943452/000162828026049105/ | | 2026-05-15 | 8-K | Shareholder vote results | | | https://www.sec.gov/Archives/edgar/data/943452/000114036126021657/ef20073674_8k.htm | | 2026-04-22 | 10-Q | Quarterly report for the period ended Mar 31, 2026 | 2026-03-31 | wab-20260331 | https://www.sec.gov/Archives/edgar/data/943452/000162828026026422/wab-20260331.htm | | 2026-04-22 | 8-K | Earnings release and Investor disclosure | | wab-20260422 | https://www.sec.gov/Archives/edgar/data/943452/000162828026026384/ | Every filing on SEC EDGAR (CIK 943452): https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000943452&type=&dateb=&owner=include&count=40 ## Risks - Medium: Freight demand depends on rail activity and rail car builds in North America. Lower builds reduced Components sales in Q3 2026, and fewer locomotive deliveries kept Equipment sales growth at 0.3%. - Medium: Locomotive orders come in a few large contracts. Delays in deliveries, customer financing or payments can move sales and cash flow between years. - Medium: Wabtec paid about $1.797 billion for Inspection Technologies, about $792 million for Frauscher and about $1.053 billion for Dellner Couplers. Weak results from them can cause goodwill impairments, and the purchases raised debt. - Medium: Wabtec makes and sells products in many countries. Tariffs, trade rules and currency changes can raise costs and change reported results. - Low: Safety and emissions rules shape demand for locomotives and train control systems. Changes in these rules can delay customer orders. ## Links - Page: https://picks.utilarium.app/company/WAB/ - History of changes: https://picks.utilarium.app/company/WAB/history/ - JSON with full history: https://picks.utilarium.app/data/company/WAB.json > Picks is a personal record of stock picks. It gives general opinions about stocks, including a "Top pick" label. They are not tailored to your needs, goals or risk tolerance. Kevin is not a registered adviser and relies on the general-advice exemption in Canadian securities law (NI 31-103 s.8.25). Do your own research, or ask a registered adviser. Kevin may hold any stock on this site. Prices, intrinsic values and ratings can be delayed or wrong; check the original source. Full disclaimer: /disclaimer/.