Wabtec Corporation (NYSE:WAB) has announced its financial results for the third quarter of 2025, delivering a performance that largely met Wall Street's expectations on the top line while providing a modest positive surprise on profitability. The company's updated full-year guidance and substantial backlog growth provide a clear view of its operational momentum, even as the market's immediate reaction to the earnings news appeared muted.
Earnings and Revenue Versus Estimates
The rail equipment manufacturer reported quarterly sales of $2.886 billion, representing a solid 8.4% increase compared to the same period last year. This figure came in very close to analyst projections, which had anticipated revenue of approximately $2.913 billion. While the company narrowly missed the revenue estimate, the growth demonstrates continued demand across its business segments.
Where Wabtec notably exceeded expectations was in its bottom-line performance. The company reported adjusted earnings per diluted share of $2.32, surpassing the consensus estimate of $2.30. This represents a significant 16% improvement over the $2.00 per share reported in the third quarter of 2024. The earnings beat was primarily driven by:
- Expansion in both GAAP and adjusted operating margins
- Improved gross margins across both Freight and Transit segments
- Benefits from prior quarter share repurchases
Market Reaction and Price Action
Following the earnings release, Wabtec shares showed limited directional movement in pre-market trading, indicating a balanced interpretation of the results by investors. The minimal price reaction suggests that the market had largely priced in the company's performance, viewing the slight revenue miss as offset by the stronger-than-expected profitability and positive forward guidance.
Updated Financial Guidance
Management demonstrated confidence in the company's trajectory by raising and tightening its full-year 2025 adjusted EPS guidance. The new range of $8.85 to $9.05 represents an increase of $0.10 at the midpoint compared to previous expectations.
For full-year revenue, the company maintained its outlook of $10.925 billion to $11.225 billion, which at the midpoint of $11.075 billion aligns closely with analyst estimates of approximately $11.167 billion. The company also reaffirmed its expectation for operating cash flow conversion to exceed 90%.
Segment Performance and Backlog Strength
Wabtec's two main business segments both contributed to the quarter's growth:
Freight Segment:
- Sales increased 8.4% to $2.093 billion
- Equipment sales surged 32.0% driven by higher locomotive deliveries
- Digital sales grew 45.6%, bolstered by the acquisition of Inspection Technologies
Transit Segment:
- Sales rose 8.2% to $793 million
- Operating margin expanded significantly to 14.5% from 10.8% a year ago
The company's backlog continues to provide strong visibility, with the total multi-year backlog reaching $25.577 billion – a 15% increase compared to September 2024. The 12-month backlog of $8.267 billion also grew by 8.4% year-over-year.
Cash Flow and Balance Sheet
Wabtec generated $367 million in cash from operations during the quarter, down from $542 million in the prior year period, which the company attributed to increased tariffs and higher working capital requirements. The company ended the quarter with total available liquidity of $2.75 billion, providing ample financial flexibility for ongoing operations and strategic initiatives.
For more detailed earnings information and future estimates, view Wabtec's earnings and estimates page.
Disclaimer: This article presents financial information for informational purposes only and does not constitute investment advice, recommendation, or endorsement of any particular security or investment strategy. Readers should conduct their own research and consult with a qualified financial advisor before making investment decisions.
