What Happened?

Shares of rail equipment company Westinghouse Air Brake Technologies (NYSE:WAB) fell 11.1% in the morning session after the company delivered a weaker-than-expected quarter, with both revenue and EPS missing estimates and guidance for both metrics coming in below Wall Street's expectations. Growth was weighed down by the Freight segment, where sales were nearly flat​. The Transit segment, however, grew 7.1%, helping lift overall revenue by 2.3%​. Wabtec also introduced a new five-year forecast, targeting mid-single-digit annual revenue growth and 3.5 percentage points of adjusted operating margin expansion​. The stock's reaction suggests investors were looking for stronger guidance.

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What The Market Is Telling Us

Wabtec’s shares are not very volatile and have only had 2 moves greater than 5% over the last year. Moves this big are rare for Wabtec and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 7 months ago when the stock dropped 6.4% on the news that the company reported second quarter earnings results. Overall, it was a good quarter, but the market was expecting more. Some minor negatives include the fact that backlog missed. Also full-year revenue guidance wasn't raised despite a revenue beat in the quarter. However, full year EPS guidance was raised but the midpoint came in below Consensus.

Wabtec is up 1% since the beginning of the year, and at $190.82 per share, it is trading close to its 52-week high of $209.86 from January 2025. Investors who bought $1,000 worth of Wabtec’s shares 5 years ago would now be looking at an investment worth $2,422.

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