FDX vs. WAB: Which Dividend-Paying Transportation Stock Has an Edge?

Core Insights - FedEx Corporation (FDX) and Westinghouse Air Brake Technologies Corporation (WAB) have both announced dividend increases this year, demonstrating a commitment to shareholder returns despite economic uncertainties [1][10]. Dividend Increases - Wabtec's board approved a 25% dividend hike, raising its quarterly cash dividend to $0.25 per share ($1.00 annualized) from $0.20 ($0.80 annualized) [3]. - FedEx's board approved a dividend increase, raising its quarterly cash dividend to $1.45 per share ($5.80 annualized) from $1.38 ($5.52 annualized) [3]. Price Performance Comparison - WAB has achieved a 2.4% year-to-date gain, while FDX has experienced a double-digit decline [5]. - FDX's poor performance is attributed to revenue weakness due to geopolitical uncertainty and high inflation affecting consumer sentiment and growth expectations [8]. - WAB's strength is linked to its focus on new technologies, restructuring actions, and cost-cutting initiatives [9]. Earnings Estimates - The Zacks Consensus Estimate for WAB's 2025 and 2026 sales indicates year-over-year increases of 6.7% and 5.8%, respectively, with EPS estimates trending upward [13]. - The Zacks Consensus Estimate for FDX's current year sales implies a 4.4% year-over-year increase, but EPS estimates have been trending downward [14]. Valuation Comparison - WAB is trading at a forward sales multiple of 2.85, above its 5-year median of 2.07, indicating a higher valuation [15]. - FDX has a forward sales multiple of 0.58, below its 5-year median of 0.69, and carries a Value Score of A, while WAB has a Value Score of D [15]. Conclusion - WAB's better price performance and upward earnings estimate revisions suggest a stronger position compared to FDX, which is currently ranked lower [17][18].