3 Stocks From the Transport Equipment & Leasing Industry to Watch

The Zacks  Transportation - Equipment and Leasing industry is currently navigating a challenging macroeconomic environment. The industry grapples with challenges due to persistent inflation, tariff-related tensions and lingering supply-chain disruptions. Geopolitical woes represent further challenges.

Despite the challenging macroeconomic conditions, industry players such as Wabtec Corporation (WAB), Ryder System (R) and The Greenbrier Companies, Inc. (GBX) stand out for their solid investor-friendly steps. Notably, consistent shareholder-friendly initiatives in the form of dividend payouts or share buybacks imply solid financial strength of companies in the Equipment and Leasing industry. Such moves boost investors’ confidence and positively impact the bottom line.

Industry Overview

The Zacks Transportation - Equipment and Leasing industry includes companies offering equipment financing as well as leasing and supply-chain management services. The industry includes aircraft, railcar and intermodal container lessors. Some of these companies even provide logistics and transportation solutions, such as vehicles, drivers, management and administrative services. Most industry participants offer fleet management solutions and serve customers, varying from small businesses to large international enterprises. Customers range from a wide variety of industries, the most significant being automotive, electronics, transportation, grocery, lumber and wood products, food service and home furnishing. A few of these companies provide locomotives and technology-based equipment, systems and services to freight rail and passenger transit industries.

Factors Deciding the Industry's Outlook

Strong Financial Returns for Shareholders: With economic activities gaining pace from the pandemic lows, more and more companies are allocating their increasing cash pile through dividends and buybacks to pacify long-suffering shareholders. This underlines their financial strength and confidence in the business. Among the Transportation – Equipment and Leasing industry players, on July 10, 2025, Ryder’sboard of directors has approved a dividend hike of 12%, thereby raising its quarterly cash dividend to 91 cents per share ($3.64 annualized) from 81 cents ($3.24 annualized). Wabtec (on Feb. 7, 2025) announced a 25% dividend increase, thereby raising its quarterly cash dividend from 20 cents per share to 25 cents.

Economic Uncertainty Remains: Ongoing tariff tensions have led to escalated trade woes across the globe. These tariff-induced economic uncertainties do not bode well for industry participants. With inflation remaining a concern, risks associated with an economic slowdown and geopolitical tensions dampen the prospects of stocks belonging to this industrial cohort. Sluggish economic growth and inflationary woes are likely to make markets more volatile in the coming days. Rising economic uncertainty does not bode well for industry players.

Supply-Chain Disruptions & High Costs: Although economic activities picked up from the pandemic gloom, supply-chain disruptions continue to dent stocks in the industry. Increased operating costs are also limiting bottom-line growth. Due to supply-chain troubles, costs will likely continue to be steep going forward.

Zacks Industry Rank Indicates Encouraging Prospects

The Zacks Transportation - Equipment and Leasing industry, housed within the broader Zacks Transportation sector, currently carries a Zacks Industry Rank #75. This rank places it in the top 31% of more than 250 Zacks industries.

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.

Before we present a few stocks that investors can retain given their growth prospects, let’s take a look at the industry’s recent stock market performance and current valuation.

Industry Lags S&P 500 & Sector

The Zacks Transportation - Equipment and Leasing industry has underperformed the Zacks S&P 500 Composite as well as the broader sector over the past year.

Over this period, the industry has declined 18.4% compared with the S&P 500 Index’s northward movement of 18.7%. The broader sector has declined 10.2%.

One-Year Price Performance

Industry's Current Valuation

On the basis of the forward 12-month price-to-earnings (P/E- F12M), a commonly used multiple for valuing equipment and leasing stocks, the industry is currently trading at 13.99X, compared with the S&P 500’s 23.52X. It is also below the sector’s P/E (F12) ratio of 13.84X.

Over the past five years, the industry has traded as high as 15.65X, as low as 8.42X and at the median of 11.57X, as the chart below shows.

P/E Ratio (Forward 12-Month)

3 Transport Equipment Leasing Stocks to Watch Now

We are presenting three Zacks Rank #3 (Hold) stocks that are well-positioned to grow in the near term. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Wabtec: This Pittsburgh, PA-based company offers technology-based locomotives, equipment, systems, and services for the freight rail and passenger transit industries worldwide.

Since WAB’s fortunes are tied to the broader economy, improvement of the same, led by cooling inflation, has led to this gain. Focus on new technologies to improve safety and reliability, along with its restructuring actions and cost-cutting actions, are the main drivers of its strength lately. Its strong free cash flow generating ability helps in dividend payments and share buybacks.WAB has an impressive earnings surprise history. The company's earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters (missed the mark in the remaining quarter), delivering an average surprise of 5.41%.

The Zacks Consensus Estimate for WAB’s 2025 earnings has been revised 2% upward over the past 60 days. WAB has an expected earnings growth rate of 17.6% for 2025.

Price and Consensus: WAB

R: Headquartered in Miami, FL, Ryder operates as a logistics and transportation company worldwide. Ryder has been making uninterrupted dividend payments for more than 49 years. Such shareholder-friendly moves instill confidence in investors and positively impact the bottom line. Ryder's cost-cutting initiatives in response to the weak freight market conditions are also commendable. Higher free cash flow generation expectation for 2025 is another added positive.

Ryder has an impressive earnings surprise history. The company's earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 2.9%.

The Zacks Consensus Estimate for R’s 2025 earnings has been revised 0.7% upward over the past 60 days. R has an expected earnings growth rate of 9.3% for 2025.

Price and Consensus: R

Greenbrier: Headquartered in Lake Oswego, OR, Greenbrier designs, manufactures, and markets railroad freight car equipment in North America, Europe, and South America.

Greenbrier has a solid earnings surprise history. The company's earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters, delivering an average surprise of 70%.

The Zacks Consensus Estimate for GBX’s 2025 earnings has remained unchanged in the past 60 days. GBX’s expected earnings growth rate for 2025 is 33.1%.

Price and Consensus: GBX

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This article originally published on Zacks Investment Research (zacks.com).

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