Westinghouse logged a 1.2% change during Friday's afternoon session, and is now trading at a price of $125.49 per share.
Westinghouse returned gains of 24.4% last year, with its stock price reaching a high of $127.57 and a low of $91.89. Over the same period, the stock outperformed the S&P 500 index by 3.7%. More recently, the company's 50-day average price was $117.2. Westinghouse Air Brake Technologies Corporation provides technology-based locomotives, equipment, systems, and services for the freight rail and passenger transit industries worldwide. Based in Pittsburgh, PA, the large-cap Industrials company has 27,000 full time employees. Westinghouse has offered a 0.5% dividend yield over the last 12 months.
Growing Revenues With Increasing Reinvestment in the Business:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $4,364 | $8,200 | $7,556 | $7,822 | $8,362 | $9,457 |
| Revenue Growth | n/a | 87.92% | -7.85% | 3.52% | 6.9% | 13.09% |
| Operating Margins | 11% | 8% | 10% | 11% | 12% | 13% |
| Net Margins | 7% | 4% | 5% | 7% | 8% | 8% |
| Net Income (MM) | $295 | $327 | $414 | $558 | $633 | $758 |
| Net Interest Expense (MM) | -$112 | -$219 | -$199 | -$177 | -$186 | -$214 |
| Depreciation & Amort. (MM) | $109 | $401 | $473 | $491 | $479 | $491 |
| Earnings Per Share | $1.53 | $1.84 | $2.17 | $2.97 | $3.46 | $4.23 |
| EPS Growth | n/a | 20.26% | 17.93% | 36.87% | 16.5% | 22.25% |
| Diluted Shares (MM) | 193 | 177 | 190 | 188 | 183 | 179 |
| Free Cash Flow (MM) | $221 | $830 | $648 | $943 | $889 | $749 |
| Capital Expenditures (MM) | $93 | $186 | $136 | $130 | $149 | $176 |
| Current Ratio | 2.7 | 1.29 | 1.2 | 1.32 | 1.25 | 1.19 |
| Total Debt (MM) | $3,857 | $4,334 | $4,686 | $4,060 | $4,253 | $4,047 |
| Net Debt / EBITDA | 5.62 | 3.51 | 3.36 | 2.62 | 2.49 | 2.16 |
Westinghouse has growing revenues and increasing reinvestment in the business, a strong EPS growth trend, and irregular cash flows. However, the firm suffers from weak operating margins with a stable trend and a highly leveraged balance sheet.
A Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:
Westinghouse has a trailing twelve month P/E ratio of 27.9, compared to an average of 22.19 for the Industrials sector. Based on its EPS guidance of $6.69, the company has a forward P/E ratio of 17.5. According to the 23.5% compound average growth rate of Westinghouse's historical and projected earnings per share, the company's PEG ratio is 1.19. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 10.5%. On this basis, the company's PEG ratio is 2.67. This suggests that these shares are overvalued. In contrast, the market is likely undervaluing Westinghouse in terms of its equity because its P/B ratio is 2.18 while the sector average is 4.06. The company's shares are currently trading 69.4% above their Graham number.
Westinghouse Has an Analyst Consensus of Some Upside Potential:
The 10 analysts following Westinghouse have set target prices ranging from $115.0 to $153.0 per share, for an average of $131.3 with a buy rating. As of April 2023, the company is trading -10.7% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Westinghouse has a very low short interest because 1.4% of the company's shares are sold short. Institutions own 94.3% of the company's shares, and the insider ownership rate stands at 1.0%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 11% stake in the company is worth $2,521,772,581.
