Wabtec Buys RELCO Locomotives To Fortify Market Capabilities

Westinghouse Air Brake Technologies Corporation operating as Wabtec Corporation (NYSE:WAB) acquired RELCO Locomotives, an established name in the locomotive leasing, rebuilding and repairing industry.

The transaction valued at $29 million on cash-free and debt-free basis, increases Wabtec’s freight services capabilities and capacity, thereby driving growth in the remanufacturing and repair business.

Wabtec’s president and CEO Rafael Santana feels that the combined entity will help generate aftermarket services growth, besides supporting the development of innovative solutions to improve asset utilization and lower operating costs for customers.

The buyout, accretive in the first year itself, will enable Wabtec to expand its network, fortify market capabilities and better serve the rail industry. RELCO is expected to have generated sales worth approximately $50 million in 2019.

Wabtec aims to grow its portfolio through strategic acquisitions. To this end, the company carried out a series of acquisitions in a short span of time. In February 2019, it completed the merger with GE Transportation, a business unit of GE. The consolidated entity has an expanded product portfolio and a larger customer base.

Previously, in 2018, the company bought Annax and Lynxrail. Annax complements Wabtec’s product portfolio with cutting-edge solutions and strengthens its capabilities with existing customers, simultaneously offering opportunities in the new markets. Meanwhile, Lynxrail’s technology in combination with Wabtec’s Track IQ cements the company’s position in wayside condition monitoring technology worldwide.

Zacks Rank & Key Picks

Wabtec carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader Transportation sector are SkyWest, Inc. (NASDAQ:SKYW) , Delta Air Lines, Inc. (NYSE:DAL) and Hub Group, Inc. (NASDAQ:HUBG) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Shares of SkyWest, Delta and Hub Group have rallied more than 30%, 20% and 29%, respectively, in a year’s time.

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