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Investing.com - Westinghouse Air Brake (NYSE:WAB) shares fell 6.4% on Thursday despite KeyBanc reiterating its Overweight rating and $240 price target following the company’s second-quarter earnings results. According to InvestingPro data, WAB trades at a P/E ratio of 29.9x, suggesting premium pricing relative to its near-term earnings growth potential.
The transportation equipment manufacturer reported better-than-expected second-quarter earnings and raised its full-year 2025 guidance, increasing its sales forecast by $200 million at the midpoint and earnings per share guidance by $0.20 at the midpoint. The guidance increase largely reflects the inclusion of the recently closed Inspection Tech acquisition. With a strong financial health score of 2.69 (rated "GOOD" by InvestingPro) and a healthy current ratio of 1.76, WAB appears well-positioned to execute its growth strategy.
WAB’s quarterly performance showed margin strength in both its Freight and Transit segments, despite a $60 million Freight/Equipment sales pushout due to a supplied part issue. The company’s stock decline occurred after shares had reached all-time highs the previous day.
KeyBanc expects WAB’s earnings momentum to continue with margin-accretive additions from recent acquisitions, including Inspection Tech and the upcoming closings of Dellner and Frauscher deals. The firm projects 2025 EPS growth of 20% following 21% and 28% growth in 2023-24, respectively.
The research firm also highlighted WAB’s healthy balance sheet with approximately 2.2x net debt to trailing twelve-month EBITDA following the Inspection Tech acquisition, and expectations that the company could generate over $1 billion in free cash flow this year, weighted toward the second half of 2025.
In other recent news, Westinghouse Air Brake Technologies Corp reported its second-quarter 2025 earnings, highlighting a mixed performance. The company achieved an adjusted earnings per share (EPS) of $2.27, which exceeded analyst expectations of $2.18. However, Westinghouse Air Brake fell short on revenue, reporting $2.71 billion compared to the anticipated $2.77 billion. The revenue miss has drawn attention from investors, despite the positive EPS results. Analysts and investors are closely watching these figures as they reflect the company’s financial health. These developments have sparked discussions among market participants regarding the company’s future performance. The mixed earnings report comes amidst a backdrop of broader market dynamics impacting the industry.
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