To boost its presence in the international markets, Westinghouse Air Brake Technologies Corporation WAB, operating as Wabtec Corporation, reached a definitive agreement to acquire the Brazilian company Super Metal. Financial terms of the deal were not disclosed.
Super Metal is a leading supplier of automated vehicles and equipment solutions supporting rail operations. The buyout will boost Wabtec’s Railway Maintenance portfolio. The acquisition is a highly prudent move as it expands Wabtec’s rail maintenance portfolio in South America by complementing its presence in Contagem, Brazil, with respect to freight rail manufacturing.
Explaining the rationale behind the deal, Pascal Schweitzer, the group president of Wabtec’s Global Freight Services, said: “Super Metal is a great addition to our maintenance of way portfolio. Their differentiated road-to-rail solutions will accelerate our international growth in key regions such as Latin America, Asia, and Africa.”
The current takeover complements Wabtec’s 2021 acquisition of Nordco. Acquired for $400 million, Nordco was a provider of products and services for rail-related industries. The acquisition broadened WAB’s installed base apart from facilitating its domestic and international growth.
In early 2022, Wabtec acquired the railway friction business of India-based MASU for approximately $34 million. The buyout also strengthened WAB’s installed base and expanded its brake product portfolio. WAB’s growth-by-acquisition strategy is a smart approach and is expected to boost its top line.
Zacks Rank & Key Picks
Wabtec currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the broader Zacks Transportation sector, investors may consider better-ranked stocks like Covenant Logistics CVLG and Ryder System R.
Covenant Logistics offers a portfolio of transportation and logistics services, including asset-based expedited, dedicated and irregular route truckload capacity, besides asset-light warehousing, transportation management and freight brokerage capability.
The gradually improving freight market scenario is a tailwind to Covenant. CVLG’s cost-control efforts are appreciated as well. CVLG currently sports a Zacks Rank #1. The stock has witnessed the Zacks Consensus Estimate for 2022 earnings being revised 10.1% upward over the past 60 days.
Miami, FL-based Ryder provides integrated logistics and transportation solutions. With improved economic and freight market conditions, R is benefiting from higher rental revenues owing to strong demand and favorable pricing. R’s acquisitions of Whiplash and Midwest Warehouse & Distribution System expand its e-commerce fulfillment network and boost multi-client warehousing capabilities. The transactions are expected to drive growth in the supply-chain solutions segment.
Ryder currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for R’s 2022 earnings has been revised 7% upward in the past 60 days.
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