Westinghouse Air Brake Technologies Corporation (WAB): A Bull Case Theory

We came across a bullish thesis on Westinghouse Air Brake Technologies Corporation on CompoundingLab’s Substack. In this article, we will summarize the bulls’ thesis on WAB. Westinghouse Air Brake Technologies Corporation's share was trading at $193.54 as of October 13th. WAB’s trailing and forward P/E were 29.49 and 23.75 respectively according to Yahoo Finance.

Westinghouse Air Brake Technologies (WAB) is a quietly dominant player in global freight and transit markets, providing critical rail infrastructure solutions across locomotives, braking systems, and digital rail technologies. The company combines recurring aftermarket revenues with exposure to long-cycle equipment orders, giving it a durable and predictable business model.

WAB has consistently delivered strong returns, with a five-year CAGR of 24.7% versus the S&P 500’s 14.6%, and a three-year CAGR of 31% versus the S&P’s 19.4%, underscoring its ability to compound capital in a cyclical, capital-intensive industry. The recent 12-month underperformance, up only 4.3% compared to the S&P’s 16%, reflects macro softness in U.S. industrial activity and global trade headwinds rather than a deterioration in fundamentals.

The company maintains a 10-year median return on invested capital of approximately 8% and a balanced capital structure, with a debt-to-equity ratio of 44%. Its narrow moat is supported by high switching costs and sticky aftermarket revenue from its installed base, reinforcing the resilience of its freight segment, which contributes 72% of revenues, alongside the transit segment (28%) that provides more stable international demand. Historical revenue growth has averaged 13% annually, and WAB’s forward outlook is constructive, driven by fleet modernization, decarbonization initiatives, and emerging-market transit build-outs.

Management has reaffirmed guidance, highlighted strategic wins in digital and clean-energy rail solutions, and maintained disciplined cost control, reinforcing long-term visibility. While the stock trades modestly above its intrinsic value estimate of $177, WAB offers investors exposure to durable rail infrastructure megatrends, high-margin services, and steady compounding, making it a compelling name for those focused on long-term industrial growth and resilience.

Previously we covered a bullish thesis on Canadian National Railway Company (CNI) by Kay Kay in February 2025, which highlighted its irreplaceable rail network, pricing power, and scale efficiencies. The stock has depreciated approximately by 3.63% since our coverage. The thesis still stands as CNI remains a durable North American railroad. Westinghouse Air Brake Technologies (WAB) shares a similar thesis but emphasizes recurring aftermarket revenues and long-cycle equipment exposure.

Westinghouse Air Brake Technologies Corporation is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 68 hedge fund portfolios held WAB at the end of the second quarter which was 58 in the previous quarter. While we acknowledge the potential of WAB as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.