Wabtec Completes the Purchase of Inspection Technologies Division

Wabtec Corporation (WAB) is strengthening its operations through strategic acquisitions. To this end, Wabtec announced that it has completed the acquisition of Evident’s Inspection Technologies division (Inspection Technologies) for $1.78 billion (~$1.68 billion after tax benefits).

The deal was financed through a combination of cash on hand, newly issued term notes, plus term loans and short-term borrowing under the company’s credit agreement. The deal was initially announced on Jan. 14, 2025.

The purchase price marks an estimated multiple of 12.0x projected 2025 EBITDA adjusted for transaction and separation costs, anticipated tax benefits, and projected run-rate cost synergies of $25 million.Wabtec plans to incorporate the revenue and earnings per share (EPS) impact of this acquisition into its full-year financial guidance during its second-quarter 2025 earnings call. WAB is slated to release its second-quarter 2025 earnings on July 24, 2025, before market open.

Rafael Santana, president and chief executive officer of Wabtec, stated, “Today, we are a stronger company with the addition of Inspection Technologies. The acquisition expands and strengthens our Digital Intelligence business, with advanced products and services for the Company’s rail, mining, and industrial sectors, while broadening our reach into other high-growth, high-margin end-markets. It enhances Wabtec's existing portfolio, is accretive to key financial metrics, and aligns with the company's long-term vision to lead the industry in innovation for our customers.”

How Will Wabtec Benefit?

The acquisition of Inspection Technologies is anticipated to generate immediate shareholder value with a high single-digit revenue growth outlook, accretive adjusted earnings before interest and taxes margins and accretive return on invested capital over time. Further, the deal is expected to be slightly accretive to adjusted EPS in the second half of 2025.

The deal widens Wabtec’s Digital Intelligence business growth opportunities and recurring revenue, effectively doubling the size of its total addressable market from almost $8 billion to $16 billion.

Overall, the deal is likely to boost Wabtec's product portfolio and operational excellence, enabling it to deliver superior solutions to customers and increase its business opportunities in high-growth industrial markets.

Nalin Jain, president of Wabtec’s Digital Intelligence Group, stated, “Inspection Technologies’ product portfolio strongly complements our existing digital technologies, while adding advanced automated inspection capabilities in a space where data acquisition, analytics, and automation are critical. It will accelerate the development of scalable technologies by integrating advanced analytics, sensors, and AI technology to deliver enhanced predictive maintenance capabilities to our customers. Evident Inspection Technology employees have done a fantastic job in delivering these innovative technologies and I am looking forward to welcoming them to the Wabtec family.” 

WAB's Zacks Rank & Price Performance

Wabtec currently carries a Zacks Rank #2 (Buy).

WAB shares have gained 10.4% so far this year, outperforming the Zacks  Transportation - Equipment and Leasing industry as well as the S&P 500, of which the company is a key member.

WAB Stock YTD Price Comparison

Other Stocks to Consider

Investors interested in the Transportation sector may also consider Air Lease Corporation (AL) and SkyWest, Inc. (SKYW), both carrying a Zacks Rank #2.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Air Lease, headquartered in Los Angeles, CA, 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’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%.

SkyWest, founded in 1972, is based in St. George and operates regional jets for major U.S. airlines. SKYW is the holding company for SkyWest Airlines, SkyWest Charter and SkyWest Leasing, an aircraft leasing company.

SKYW has an impressive earnings surprise track record, having surpassed the Zacks Consensus Estimate in each of the last four quarters. The average beat was 17.1%. The Zacks Consensus Estimate for current and next-year earnings has been revised upward over the past 60 days.

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

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