Wabtec hits record high on improved 2026 outlook for freight, transit

Westinghouse Air Brake Technologies, better known as Wabtec (WAB), raised its full-year revenue and profit outlook after reporting second-quarter results that topped Wall Street expectations, sending shares as much as 12% higher Wednesday to a record high.

Before Wednesday's rally, Wabtec (WAB) shares had gained 37% so far this year.

The rail equipment and technology company reported second-quarter revenue of $3.18 billion, up 17.5% from a year earlier and above the Wall Street consensus estimate of $3.07 billion. Adjusted earnings rose to $2.76 a share from $2.27 a year earlier, beating analysts' consensus estimate of $2.61. GAAP earnings were $2.33 a share, up from $1.96 a year ago.

Net income rose to $399 million, or $2.33 a share, from $339 million, or $1.96 a share, a year earlier.

Wabtec (WAB), whose products include locomotive systems, air brake equipment, digital rail technologies and transit components, said higher sales in both its Freight and Transit businesses, including contributions from recent acquisitions, drove the quarterly performance.

"Our strong first half, with solid second quarter execution across our businesses driving robust sales growth, margin expansion and a 22% increase in adjusted EPS growth," Chairman and Chief Executive Officer Rafael Santana said.

Margins expand across both businesses

Second-quarter GAAP operating margin improved to 18.9% from 17.4% a year earlier, while adjusted operating margin increased to 21.9% from 21.1%. The company said stronger sales and improved gross margins more than offset higher operating expenses.

Freight segment revenue climbed 16.9% to $2.24 billion. Equipment sales surged 35% on higher locomotive deliveries, while digital sales jumped 88.5%, boosted by the acquisitions of Inspection Technologies and Frauscher Sensor Technologies. Services revenue declined 4.2% as expected because of lower modernization deliveries.

Transit revenue increased 18.9% to $936 million, driven by the Dellner Couplers acquisition, higher original equipment and aftermarket demand and favorable foreign exchange.

Backlog provides visibility

Wabtec (WAB) ended the quarter with a 12-month backlog of $9.14 billion, up 11.3% from a year earlier. Total backlog reached $30.93 billion, an increase of 41.7%, giving the company strong visibility into future demand.

Operating cash flow more than doubled to $441 million from $209 million in the prior-year quarter, reflecting higher earnings and favorable working capital. During the quarter, Wabtec (WAB) repurchased $215 million of its shares and paid $53 million in dividends.

Company lifts 2026 guidance

Wabtec (WAB) raised its full-year revenue forecast to a range of $12.30 billion to $12.60 billion, above the Wall Street consensus estimate of $12.38 billion. The new outlook raises the midpoint of its prior guidance by $110 million and implies revenue growth of about 11.5% from 2025.

The company also increased its adjusted earnings forecast to $10.60 to $10.90 a share, compared with the analyst consensus of $10.65. The new range raises the midpoint of its previous guidance by $0.30 and implies adjusted earnings growth of about 19.9% from the prior year, as management cited continued demand, successful integration of recent acquisitions and strong execution across its businesses.