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Why Is Wabco (WBC) Down 0.2% Since Last Earnings Report?

A month has gone by since the last earnings report for Wabco Holdings (WBC). Shares have lost about 0.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Wabco due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

WABCO Q3 Earnings & Revenues Hurt by Lower Production

Wabco Holdings delivered third-quarter 2019 earnings of $1.13 per share in the reported quarter, marking a decline from $1.41 recorded in the prior-year quarter. The bottom line also missed the Zacks Consensus Estimate of $1.75.

Reportedly, quarterly sales of WABCO declined 12.7% to $798.4 million. This decline resulted from a challenging environment that led to a slump in the global production of new trucks, buses and trailers in India and Europe. The Zacks Consensus Estimate for sales was pegged at $924 million.

During the reported quarter, gross profit decreased 13.1% year over year to $238.9 million. Operating expenses dropped $10.1 million year over year to $158 million.

Financial Details

At the end of third-quarter 2019, Wabco had cash and cash equivalents of $817.1 million compared with $503.8 million as of Dec 31, 2018. The company’s long-term debt was $808.2 million as of Sep 30, 2019, marking a decline from $845.2 million as of Dec 31, 2018.

At the end of third-quarter 2019, WABCO witnessed net cash provided by operating activities of $307.5 million compared with $300.5 million a year ago.

How Have Estimates Been Moving Since Then?

Estimates review followed a downward path over the past two months.

VGM Scores

At this time, Wabco has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Wabco has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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