WAB to Gain From Frauscher Sensor Technology Group Buyout: Here's How

Wabtec Corporation (WAB) is strengthening its operations through strategic acquisitions. To this end, Wabtec has inked a deal to purchase Frauscher Sensor Technology Group for an enterprise value of €675 million in cash.  The deal is subject to customary closing conditions and regulatory approvals.

The purchase price marks an estimated multiple of 12.4x projected 2025 EBITDA, adjusted for projected run-rate cost synergies that Wabtec expects to realize over the next three years. Frauscher is anticipated to generate nearly €145 million in revenues in 2025, with expected growth exceeding Wabtec’s average growth over the next five years.

Frauscher is a global market leader in train detection, wayside object control solutions and axle counting systems. Upon completion, Frauscher Sensor Technology Group will be integrated into Wabtec’s Digital Intelligence business.

Nalin Jain, president of Wabtec’s Digital Intelligence Group, stated, “Frauscher is a strong addition to the Digital Intelligence business, with a complementary product portfolio that supports our vision of maximizing the safety, efficiency, and capacity of the global rail network. By combining our businesses, we will be able to deliver safety-critical insights through customized systems combining sensors with software and analytics, along with a comprehensive lifecycle services suite.  Given Frauscher’s significant presence in Europe and India, this acquisition will further strengthen our international growth strategy in these large markets.”

How Will Wabtec Benefit?

The acquisition of Frauscher Sensor Technology Group is anticipated to generate immediate shareholder value with an accretive growth profile, accretive adjusted earnings before interest and taxes margins and accretive return on invested capital over time. Further, the deal is expected to be accretive to adjusted earnings per share in the first year of ownership.

The deal widens Wabtec's Digital Intelligence portfolio and increases its business opportunities in the high-growth railway signaling market.  

Rafael Santana, president and chief executive officer of Wabtec, stated, “This strategic acquisition enhances Wabtec's current Digital Intelligence portfolio, our opportunities in a high potential market, and aligns with our Company's long-term growth strategy. Frauscher has an industry leading portfolio that offers a rare combination of innovative technology, sustained growth, and strong and resilient profitability.”

WAB’s Zacks Rank & Price Performance

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

WAB shares have gained 12.4% 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 SkyWest, Inc. (SKYW) and Kirby Corporation (KEX).

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 sports a Zacks Rank #1 (Strong Buy).  You can see the complete list of today’s Zacks #1 Rank stocks here.

SKYW has an impressive earnings surprise track record, having surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 17.1%. The Zacks Consensus Estimate for second-quarter 2025 earnings has been revised 1.30% upward in the past 60 days. SKYW’s second-quarter 2025 earnings are expected to grow 28.5% year over year. 

KEX currently carries a Zacks Rank of 2.

KEX has an expected earnings growth rate of 18.7% for the current year. The company has an encouraging earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 5%. Shares of KEX have rallied 10.5% year to date.

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

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