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Chicago, IL – July 1, 2025 – Today, Zacks Equity Research discusses Wabtec Corp. WAB, Air Lease Corp. AL and The Greenbrier Companies, Inc. GBX.
Link: https://www.zacks.com/commentary/2557953/3-stocks-to-watch-from-the-transport-equipment-leasing-industry
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 Corp., Air Lease Corp. and The Greenbrier Companies, Inc. 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.
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, ranging 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.
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, 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.
The Zacks Transportation - Equipment and Leasing industry, housed within the broader Zacks Transportation sector, currently carries a Zacks Industry Rank #43. This rank places it in the top 18% 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 outperform the bottom 50% by a factor of more than two to one.
Before we present a few stocks that investors can buy or retain given their growth prospects, let's take a look at the industry's recent stock market performance and current valuation.
The Zacks Transportation - Equipment and Leasing industry has underperformed the Zacks S&P 500 composite index while outperforming the broader sector over the past year.
Over this period, the industry has declined 10.6% compared with the S&P 500 Index's northward movement of 12.5%. The broader sector has declined by 26.2%.
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 14.38X, compared with the S&P 500's 22.43X. It is also below the sector's P/E (F12) ratio of 14.19X.
Over the past five years, the industry has traded as high as 15.65X, as low as 8.42X and at the median of 11.51X.
We are presenting three stocks that are well-positioned to grow in the near term.
Wabtec: This Pittsburgh, PA-based company offers technology-based locomotives, equipment, systems, and services for the freight rail and passenger transit industries worldwide. With WAB's financial health being linked directly to the global economy, the improving global rail supply market in the post-COVID scenario is a positive for the company.
Focus on new technologies to improve safety and reliability, together with its restructuring actions and cost-cutting actions, are the main drivers of its strength lately. Its strong free cash flow generating ability ensures continuity in its dividend payments and share buybacks. WAB carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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 5.86%. 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 15.3% for 2025.
AL: Headquartered in Los Angeles, Air Lease operates as an aircraft leasing company engaged in purchasing and leasing commercial jet aircraft to airlines worldwide.
With a globally diversified customer base of 116 airlines in 58 different countries, more than 95% of AL's business revenues originate from airlines located outside of the United States. Steady growth in the fleet, profits earned from aircraft sales and higher end-of-lease revenues contribute to AL's top-line growth. Consistent shareholder-friendly moves, such as dividend payments, look encouraging and positively impact the company's bottom line. AL carries a Zacks Rank #2.
AL's earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed the mark in the remaining quarter, delivering an average miss of 5.16%. The Zacks Consensus Estimate for AL's 2025 earnings has moved up 2.4% over the past 60 days. AL's expected earnings growth rate for 2025 is 9.6%.
Greenbrier: Headquartered in Lake Oswego, OR, Greenbrier designs, manufactures, and markets railroad freight car equipment in North America, Europe and South America. GBX carries a Zacks Rank #3 (Hold).
Greenbrier has a solid 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 30.63%.
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 3.8%.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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This article originally published on Zacks Investment Research (zacks.com).
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