Last week, you might have seen that Westinghouse Air Brake Technologies Corporation (NYSE:WAB) released its quarterly result to the market. The early response was not positive, with shares down 3.9% to US$82.07 in the past week. The result was positive overall – although revenues of US$1.8b were in line with what the analysts predicted, Westinghouse Air Brake Technologies surprised by delivering a statutory profit of US$0.59 per share, modestly greater than expected. This is an important time for investors, as they can track a company’s performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year. NYSE:WAB Earnings and Revenue Growth May 2nd 2021
Taking into account the latest results, the consensus forecast from Westinghouse Air Brake Technologies’ nine analysts is for revenues of US$7.87b in 2021, which would reflect a modest 5.5% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to bounce 39% to US$3.04. In the lead-up to this report, the analysts had been modelling revenues of US$7.84b and earnings per share (EPS) of US$3.00 in 2021. So it’s pretty clear that, although the analysts have updated their estimates, there’s been no major change in expectations for the business following the latest results.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$87.78. There’s another way to think about price targets though, and that’s to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Westinghouse Air Brake Technologies, with the most bullish analyst valuing it at US$95.00 and the most bearish at US$76.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Westinghouse Air Brake Technologies is an easy business to forecast or the the analysts are all using similar assumptions.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Westinghouse Air Brake Technologies’ revenue growth is expected to slow, with the forecast 7.4% annualised growth rate until the end of 2021 being well below the historical 24% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 7.3% annually. So it’s pretty clear that, while Westinghouse Air Brake Technologies’ revenue growth is expected to slow, it’s expected to grow roughly in line with the industry.
The Bottom Line
The most important thing to take away is that there’s been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at US$87.78, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Westinghouse Air Brake Technologies going out to 2023, and you can see them free on our platform here..
You can also view our analysis of Westinghouse Air Brake Technologies’ balance sheet, and whether we think Westinghouse Air Brake Technologies is carrying too much debt, for free on our platform here.
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