Wabco Holdings, Inc. - Momentum

Wabco Holdings, Inc. (WBC) recently jumped to a new multi-year high after reporting strong Q3 results in late October that included a 42% earnings surprise. With a bullish next-year growth projection of 31% and attractive valuation, this Zacks #1 rank stock isn't putting the brakes on momentum.

Company Description

Wabco Holdings, Inc. develops, manufactures and sells braking systems for commercial vehicles worldwide. The company was founded in 1869 and has a market cap of $3.48 billion.

Wabco provided the Street with an update on its business on Oct 29 when the company reported strong Q3 results that handily beat expectations.

Third-Quarter Results

Revenue for the period was up 50% from last year to $545 million. Earnings also came in strong at 71 cents, 42% ahead of the Zacks Consensus Estimate, where the company now has an average earnings surprise of 48% over the last four quarters.

Clearly, Wabco's business is on the upswing with the global economy rebounding from the recession of 2009, with the company noting this was the second consecutive quarter where truck and bus production was up in every region of the world.

Wabco also noted that demand from Europe continues to be strong while growth in emerging markets like China and Brazil continues to accelerate.

Balance Sheet Strong

Wabco emerged from the quarter with its strong balance sheet in tact, with cash and equivalents of $111 million against total debt of $216 million.

Estimates

We saw some pretty solid movement in estimates off the good quarter, with the current year gaining 36 cents to $2.56 and the next-year estimate up 33 cents to $3.36, a bullish 31% growth projection.

Valuation

But in spite of the gains, the valuation picture still looks solid, with a PEG Ration (PE/Growth) of just .67%, with 1 being a benchmark for value.

12-Month Chart

On the chart, shares have been strong with the market since early September, recently hitting a new multi-year high at $54.34 on the strong quarter. Look for support from the longer-term trend line on any weakness, take a look below.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.
 
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