WABCO (WBC) Earnings Beat Estimates In Q4, Revenues Lag

WABCO Holdings Inc.’s (NYSE:WBC) fourth-quarter 2018 earnings were $2.13 per share, beating the Zacks Consensus Estimate of $1.99. In the year-ago quarter, the bottom line was $2.00.

Reportedly, sales declined 2.4% to $911.6 million, which missed the Zacks Consensus Estimate of $964.3 million. During the quarter under review, the company struggled in key global markets, majorly consisting of China, Europe and India, partly offset by growth in the Americas, Japan and Thailand.

During the reported quarter, gross profit was $278.1 million compared with $276.6 million recorded in fourth-quarter 2017. Adjusted operating expenses rose 12.1% year over year to $159.1 million.

Wabco Holdings Inc. Price, Consensus and EPS Surprise

2018 Results

In 2018, the company’s performance operating income rose 14.2% year over year to $545.7 million. Performance earnings per share were $7.87, marking an increase from $6.86 in the prior year.

The company’s sales rose 15.9% year over year to $3.8 billion.

Financial Details

WABCO had cash and cash equivalents of $503.8 million as of Dec 31, 2018, compared with $1.14 billion as of Dec 31, 2017. The company’s long-term debt was $845.2 million as of Dec 31, 2018, marking a decline from $1.02 billion as of Dec 31, 2017.

At the end of fourth-quarter 2018, WABCO witnessed net cash inflow of $168 million compared with $194.9 million a year ago.

Share Buyback Update

During the fourth quarter, the company bought 808,964 shares for $90 million. Between June 2011 and December 2018, it repurchased 21,807,366 shares for $1.89 billion in open market transactions.

Further, WABCO is authorized to repurchase shares worth approximately $600 million through Dec 31, 2020, subject to market conditions and regularity approvals. In 2019, it aims to repurchase $400 million worth of shares.

Outlook

For 2019, WABCO anticipates net sales of approximately $3.8-$4 billion and performance earnings per share of $7.60-$8.10. Further, performance operating margin expectation is pegged at 13.4-13.8%.

Zacks Rank & Stocks to Consider

WABCO currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader auto sector are AB Volvo (OTC:VLVLY) , Oshkosh Corporation (NYSE:OSK) , and Ferrari N.V. (NYSE:RACE) . Volvo currently carries a Zacks Rank #2 (Buy) while Oshkosh and Ferrari sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Volvo has an expected long-term growth rate of 5%. Share price of the company has increased 5.7% in the past three months.

Oshkosh has an expected long-term growth rate of 11.3%. Shares of the company have gained 19.2% in the past three months.

Ferrari has an expected long-term growth rate of 18.5%. Over the past three months, shares of the company have gained 15.8%.

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