WAB

Wabtec is a high-quality rail technology and equipment supplier with scale across freight and transit, plus a growing digital/aftermarket mix that tends to be stickier than new-build cycles. Its record backlog (about $27.4B at December 31, 2025) and the $386M follow-on order for MTA’s R255 hybrid battery-diesel work locomotives reinforce strong demand for modernization, emissions reduction, and reliability upgrades. The 2025 agreement to expand exclusive railcar telematics distribution with IMT into Europe also supports differentiation in connected-rail offerings and recurring revenue.

Financial execution has been strong: FY2025 sales were about $11.17B with adjusted EPS of $8.97 (up 18.7%) and GAAP EPS of $6.83 (up 13.1%). Management guided FY2026 sales of $12.2–$12.5B and adjusted EPS of $10.05–$10.45, implying continued double-digit earnings growth, but acquisition integration and macro sensitivity remain real swing factors. Valuation is not cheap at roughly 29x trailing earnings (market cap about $34.3B as of April 2, 2026), which leaves less room for operational hiccups.

The 12-month thesis rests on backlog conversion and sustained margin/cash discipline translating into another year of EPS compounding, with April 22, 2026 (Q1 2026 results) as a near-term catalyst for guidance confidence. Upside catalysts include faster-than-expected transit/freight modernization orders and smoother integration benefits from recent deals, while key risks are project timing, freight volume softness, and multiple compression if growth decelerates. The dividend is modest (about $1.24 annualized; roughly 0.5% yield), so total return is primarily earnings-growth driven.

Recommendation: HOLD. Wabtec’s backlog visibility and 2026 EPS outlook are attractive, but the stock’s elevated earnings multiple raises the bar for flawless execution over the next year.