Here's Why You Should Retain Wabtec Stock in Your Portfolio

Core Viewpoint - Wabtec Corporation (WAB) is experiencing strong performance in its Freight and Transit segments, supported by a shareholder-friendly approach, although it faces challenges from supply-chain disruptions and valuation concerns [1]. Group 1: Positive Factors - Wabtec is focusing on new technologies to enhance safety, cost efficiency, and reliability in rail operations, while also modernizing global rail fleets [2]. - The company is strengthening its operations through strategic acquisitions, including the recent acquisition of Bloom Engineering, which will enhance its Freight and Industrial Components Group [2]. - New order wins in Kazakhstan are anticipated to further boost revenues for Wabtec [2]. - Wabtec aims to provide real-time visibility and optimization for railroads, helping them maintain schedules and recover from disruptions [4]. - The management announced a 17.6% increase in its quarterly dividend, reflecting a pro-investor stance [4]. - WAB shares have outperformed the industry over the past six months [4]. Group 2: Economic Challenges - Despite signs of cooling inflation, Wabtec is still facing significant inflationary pressures, including increased costs for labor, freight, and fuel [3]. - The company is implementing cost-cutting measures and improving productivity to address high expenses and weaker-than-expected demand scenarios [3]. - Supply-chain disruptions continue to impact Wabtec, with higher commodity costs and shortages of components, chips, and labor posing major challenges [7]. Group 3: Valuation Concerns - Wabtec's stock appears overvalued, with a forward 12-month Price/Earnings ratio of 21.92 compared to the industry average of 16.33 [8]. - The trailing 12-month P/E ratio is also above the five-year median level of 18.15, indicating a stretched valuation [8]. Group 4: Foreign Operations - A significant portion of Wabtec's net revenues comes from international sales, making it vulnerable to foreign exchange volatility [9].