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Today we're going to take a look at the well-established Westinghouse Air Brake Technologies Corporation (NYSE:WAB). The company's stock received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$99.58 at one point, and dropping to the lows of US$84.24. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Westinghouse Air Brake Technologies' current trading price of US$86.79 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Westinghouse Air Brake Technologies’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Westinghouse Air Brake Technologies
Is Westinghouse Air Brake Technologies still cheap?
According to my valuation model, Westinghouse Air Brake Technologies seems to be fairly priced at around 16% below my intrinsic value, which means if you buy Westinghouse Air Brake Technologies today, you’d be paying a fair price for it. And if you believe that the stock is really worth $103.52, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Westinghouse Air Brake Technologies’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What does the future of Westinghouse Air Brake Technologies look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 49% over the next year, the near-term future seems bright for Westinghouse Air Brake Technologies. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has already priced in WAB’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?