Wabash National: An Undervalued Company With Attractive Prospects

Summary

• Wabash National strong quarterly earnings with GAAP earnings per share of $0.56.
• The company continues to execute on its goals and increase its value in the meantime.
• Shares have become cheap after a recent selloff.
• There is also significant dividend growth potential.

Wabash National Corporation (NYSE:WNC) reported earnings on July 31^st which helped reaffirm the company’s trajectory going forward. The company remains dedicated to strengthening the balance sheet by paying down debt and increasing investment in its business to diversify its revenue streams. The company raised its full-year guidance and re-affirmed its 2021 financial goals. The company’s shares have sold off in recent weeks, presenting an attractive entry point.

Earnings

Wabash reported GAAP EPS of $0.56, effectively flat year over year, though analysts were expecting a significant drop to $0.48. The company’s operating margin improved to its highest point in 2 years at 7.6%. The company confirmed, once again, that margin expansion is a big push going forward to help them meet their 2021 goal of EPS between $1.90 and $2.10. These margin improvements have already been seen in recent quarters, with a goal of 8% by 2021. The company mentions the “Wabash Management System” on its earnings calls, which is supposed to improve execution and efficiency to support better margins, though the actual measures are not entirely clear.

This quarter saw the company grow revenue 2.2% YOY to $626 million on the back of higher sale process along with strong growth in their Final Mile products and Diversified Products.

Segment	Q2 2019 Net Sales	Q2 2018 Net Sales	Growth YOY
Commercial Trailer Products	$400,892	$402,507	-0.4%
Diversified Products	$97,026	$94,085	1.03%
Final Mile Products	$134,817	$121,209	1.11%

Click to enlarge

Data From Second Quarter Earnings Report

Overall, the quarter was not a very interesting one, but it demonstrated the payoff company’s efforts to diversify revenue by growing its Final Mile and Diversified Products segments. As a result of the strong quarterly results, full-year guidance was raised, with the midpoint raised by 5 cents to $1.65 and the range now stands from $1.58 to $1.72.

Analyst’s Disclosure:I/we have no positions in any stocks mentioned, but may initiate a long position in WNC over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This article is for informational purposes only and should not be regarded as investment advice. This article should not be the sole basis for a financial decision, including the purchase or sale of stock. Any personal financial decision should be made on the basis of your own research and consideration of your unique financial goals and investing ideals.