American Railcar Industries (ARII) versus Westinghouse Air Brake Technologies Corporation (WAB) Head to Head Analysis

Westinghouse Air Brake Technologies Corporation (NYSE: WAB) and American Railcar Industries (NASDAQ:ARII) are both transportation companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, profitability, dividends, earnings, analyst recommendations, valuation and risk.

Insider & Institutional Ownership

93.9% of American Railcar Industries shares are held by institutional investors. 11.7% of Westinghouse Air Brake Technologies Corporation shares are held by insiders. Comparatively, 0.0% of American Railcar Industries shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent recommendations for Westinghouse Air Brake Technologies Corporation and American Railcar Industries, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Westinghouse Air Brake Technologies Corporation 0 6 3 0 2.33
American Railcar Industries 0 3 1 0 2.25

Westinghouse Air Brake Technologies Corporation presently has a consensus target price of $90.50, indicating a potential upside of 27.72%. American Railcar Industries has a consensus target price of $38.33, indicating a potential upside of 9.15%. Given Westinghouse Air Brake Technologies Corporation’s stronger consensus rating and higher possible upside, research analysts clearly believe Westinghouse Air Brake Technologies Corporation is more favorable than American Railcar Industries.

Earnings & Valuation

This table compares Westinghouse Air Brake Technologies Corporation and American Railcar Industries’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Westinghouse Air Brake Technologies Corporation $3.28 billion 2.07 $567.31 million $2.85 24.86
American Railcar Industries $536.17 million 1.25 $152.16 million $2.68 13.10

Westinghouse Air Brake Technologies Corporation has higher revenue and earnings than American Railcar Industries. American Railcar Industries is trading at a lower price-to-earnings ratio than Westinghouse Air Brake Technologies Corporation, indicating that it is currently the more affordable of the two stocks.

Dividends

Westinghouse Air Brake Technologies Corporation pays an annual dividend of $0.48 per share and has a dividend yield of 0.7%. American Railcar Industries pays an annual dividend of $1.60 per share and has a dividend yield of 4.6%. Westinghouse Air Brake Technologies Corporation pays out 16.8% of its earnings in the form of a dividend. American Railcar Industries pays out 59.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Westinghouse Air Brake Technologies Corporation has increased its dividend for 6 consecutive years.

Risk & Volatility

Westinghouse Air Brake Technologies Corporation has a beta of 1.03, indicating that its share price is 3% more volatile than the S&P 500. Comparatively, American Railcar Industries has a beta of 2.32, indicating that its share price is 132% more volatile than the S&P 500.

Profitability

This table compares Westinghouse Air Brake Technologies Corporation and American Railcar Industries’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Westinghouse Air Brake Technologies Corporation 8.10% 13.07% 5.62%
American Railcar Industries 9.59% 11.40% 4.31%

Summary

Westinghouse Air Brake Technologies Corporation beats American Railcar Industries on 13 of the 17 factors compared between the two stocks.

About Westinghouse Air Brake Technologies Corporation

Westinghouse Air Brake Technologies Corporation (Wabtec), doing business as Wabtec Corporation, is a provider of technology-based equipment and services for the global freight and transit rail industries. The Company’s segments include the Freight Segment and the Transit Segment. The Freight Segment primarily manufactures and services components for new and existing freight cars and locomotives, builds new switcher locomotives, rebuilds freight locomotives, supplies railway electronics, positive train control equipment, signal design and engineering services, and provides related heat exchange and cooling systems. The Transit Segment primarily manufactures and services components for new and existing passenger transit vehicles, typically regional trains, high speed trains, subway cars, light-rail vehicles and buses, builds new commuter locomotives, refurbishes subway cars, provides heating, ventilation, and air conditioning equipment, and doors for buses and subways.

About American Railcar Industries

American Railcar Industries, Inc. is a designer and manufacturer of hopper and tank railcars. The Company designs and manufactures railcars and a range of components for the North American railcar and industrial markets. It operates through three segments: manufacturing, railcar leasing and railcar services. The Company’s Manufacturing segment consists of railcar manufacturing and railcar and industrial component manufacturing. The Railcar leasing segment consists of railcars manufactured by it and leased to third parties under operating leases. The Railcar services segment consists of railcar repair, engineering and field services. As of December 31, 2016, the Company’s operations included eight manufacturing plants that fabricate and assemble raw materials, mainly steel, into railcars, railcar components and industrial components; eight railcar repair plants; and 11 mobile repair (mobile units) and mini repair shop (mini shop) locations.

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