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Wabash National Corporation Has 2 Catalysts On Its Side

Mar. 01, 2021 3:00 PM ETWabash National Corporation (WNC)5 Comments
Nick Perez profile picture
Nick Perez


  • The company's stock price was negatively impacted by COVID, but has rebounded and is ahead of where it was pre-COVID.
  • Focus on improving operating efficiency and spending in the near-term to improve operating margins is one catalyst.
  • The second catalyst is the strong rebound and strong growth expectations in its Final Mile Products segment.

Wabash National Corporation (NYSE:WNC) began its transformation into a diversified provider of engineered solutions in the trucking sector. Historically, WNC has been tied to the transportation industry and demand for new truck trailers. This is a volatile sector with variability year-over-year. The acquisition of Supreme Industries in 2017 was the starting point of the transformation. This acquisition provided access to the fast growing final mile space. WNC's two legacy segments; Commercial Trailer Products & Diversified Products provide a steady cash flow and the Final Mile Products is to deliver growth and cash flow. Management has set out goals to improve their productivity and margins through their "One Wabash' approach. The importance is to stabilize variability by reducing variable and fixed costs. The catalysts here are twofold: 1. growth in the final mile business unit; and 2. operational improvement - with a goal of 8% operating margin (ranged ~6% over the last two years).

WNC is a dominant player in both Truck Body and Trailer Makers in North America.

Source: Spartan Motors Investor Presentation

Source: Leading Truck Trailer Makers in North America

Growth within the Commercial Trailer & Diversified Products segments is going to come through largely price increases, add-on orders and partially through organic growth. As part of their long-term goals, growth in these areas is going to be largely through acquisitions given the fragmentation in business coverage. All-in-all, growth in these segments is going to be highly tied to the trucking segment and the macroeconomic condition of the U.S.

The following chart is the new trailer shipments from the FYE 2020 10-K.

There is correlation between the new trailer shipments and revenue.

The goal of Final Mile Products is to diversify out of the ebbs and flow and create a steady revenue stream year-over-year. However, the near-term outlook for trucking volumes

This article was written by

Nick Perez profile picture
I am a long only stock investor. I look for companies that are under appreciated and have a catalyst to realize a more premium valuation. I take a bottom-up up approach by analyzing the financial statements. I can be found on Twitter @NPerezResearch

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (5)

georgefelix75 profile picture
The companies diversified business group lacks integrity and management skill. I’m not sure how deep this is embedded in the overall culture. I suspect from personal experience it goes to the top…..Brent Yeagy. The stock performance does not surprise me. I don’t own shares have no position in the stock.
Sounds reasonable. Three years ago this was a $25 stock.
Nick Perez profile picture
@placeurbets2win I agree. Especially with an improved environment
@Nick Perez Wow! There is actually someone writing about this company or even talking about this company on message boards. I feel like this company and industry are so overlooked.
I’m curious how they plan to execute their “last mile” business?
georgefelix75 profile picture
@placeurbets2win I would reiterate if you think that management is an important part of your investment decision you should take a closer look at this management. I cannot say too much here but lets just say I know them well. Consider the plant in Mexico would be a start... Let me just say I have more confidence in their legal team than I do in their operations teams and they operate like they agree with me if you get my drift. Not saying the stock is a buy or sell just management is not where I would put my money.
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