WABCO Profits Fall 10.7% - Analyst Blog


WABCO Holdings Inc. ( WBC ) posted a 10.7% decrease in earnings per share to $1.08 in the fourth quarter of 2012 from $1.21 in the corresponding quarter last year. However, profits surpassed the Zacks Consensus Estimate by 13 cents. In absolute terms, profits declined 13.8% to $69.6 million from $80.7 million in the year-ago quarter.

Revenues for the quarter fell 11.2% to $596.5 million from $672.0 million in the year-ago quarter. However, revenues were ahead of the Zacks Consensus Estimate of $591.0 million.

The year-over-year fall in revenues was due to the uncertainty and instability in the global markets, which resulted in a 12% decline in global truck and bus production. Meanwhile, the company reported a 9% increase in aftermarket sales in the quarter.

Operating income declined 17.1% to $75.0 million or 12.6% of net sales from $90.5 million or 13.5% in the fourth quarter of 2011.

WABCO reported a profit of $291.6 million or $4.46 per share in 2012, down from $325.7 million or $4.73 a year ago. The company's revenues for the year dropped 11.3% to $2.5 billion, owing to the weak market conditions.

The company reported a 5% increase in global aftermarket sales in 2012. Operating income decreased 10.5% to $335.6 million or 13.5% of net sales from $375.1 million or 13.4% in 2011.

Financial Position

WABCO had cash and cash equivalents of $175.0 million as of Dec 31, 2012, up from $102.4 million as of Dec 31, 2011. The company has no long-term debt at the end of 2012.

For full year 2012, the company's operating cash flow increased to $358.3 million from $332.0 million in the prior year. Capital expenditures (net) declined to $91.7 million from $98.3 million a year ago.


For 2013, WABCO expects annual sales increase between 2% and 7% in local currencies. Operating margin is projected between 12.3% and 13.3% for the year. This will lead to earning per share from $4.30 to $4.80 based on performance.

Our Take

WABCO is the world's leading providers of electronic braking, stability, suspension and transmission control systems for heavy duty commercial vehicles. Currently, it retains a Zacks Rank #4 (Sell).

Oshkosh Corporation ( OSK ), Strattec Security Corporation ( STRT ) and Magna International Inc. ( MGA ) are performing well in the same industry where WABCO operates. Oshkosh and Strattec Security are Zacks Rank #1 (Strong Buy) stocks while Magna International carries a Zacks Rank #2 (Buy).

MAGNA INTL CL A (MGA): Free Stock Analysis Report

OSHKOSH CORP (OSK): Free Stock Analysis Report

STRATTEC SEC CP (STRT): Free Stock Analysis Report

WABCO HOLDINGS (WBC): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: MGA , OSK , STRT , WBC



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