WAB Margins Improve, Yet Valuation Concerns Persist

Westinghouse Air Brake Technologies (WAB) reported Q3 FY2025 revenue of US$2.9 billion and basic EPS of US$1.81. The company's trailing twelve-month net profit margins saw a notable increase to 10.9%. This margin improvement reinforces a bullish outlook for WAB's higher-margin services and digital offerings. However, these positive developments occur despite ongoing concerns regarding declining freight backlog and softer demand in North America. Analysts note that WAB's current P/E ratio of 37x appears rich. This valuation is significantly higher compared to its intrinsic DCF value of US$181.33 and peer averages, suggesting the stock may be overvalued in the market.