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Wabtec Had An Excellent Year In 2014

William Bias profile picture
William Bias


  • Wabtec improved its fundamentals through a good balance of organic and non-organic means.
  • Wabtec sits on an excellent balance sheet.
  • Global infrastructure investment will serve as a catalyst for long-term growth.

On Feb. 20, railroad parts, service and equipment company, Westinghouse Air Brake Technologies or Wabtec for short (NYSE: NYSE:WAB), came out with its 2014 annual 10-K which follows up on its earnings announcement released on Feb. 18 in more detail. The company had an excellent year.

In 2014, Wabtec's revenue, net income, and free cash flow all expanded 19%, 20%, and 112% respectively year over year. On top of that, the company sports an excellent balance sheet. Its $426 million in cash equated to 24% of stockholder's equity. I love seeing companies with cash amounting to 20% or more of stockholder's equity to get them through rough times. Wabtec manages its long-term debt well. Despite increasing its long-term debt 16% year over year, its long-term debt to equity ratio still came in at 29% in 2014 vs. 28% in 2013. Let's take a look to see what lies behind these rock-solid fundamentals.

A good balance

I always like to see an improvement in a company's fundamentals due to a strong demand for its products, followed by non-organic means such as price increases and acquisitions in order of personal preference. Wabtec struck a near-perfect balance between increased demand and acquisitions. Strong demand in Wabtec's freight and transit segment contributed $269 million or 56% of the overall increase in revenue in 2014. Acquisitions contributed $229.4 million or 48% of Wabtec's overall growth in revenue in 2014.

Growth in revenue outpaced the growth in expenses, contributing to net income and margin expansion. In 2014, Wabtec's operating margins clocked in at 17.3% vs. 17% in 2013. Net profit margins came in at 11.6% in 2014 vs. 11.4% in 2013. Timely customer collections as well as favorable changes in operating assets and liabilities contributed heavily to Wabtec's free cash flow expansion.

Thoughts on the future

This article was written by

William Bias profile picture
I have been analyzing stocks since 1992 and a freelance writer since 2012.

Analyst’s Disclosure: The author is long WAB. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

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Comments (1)

PSalerno profile picture
WAB was always expensive, not just now.
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