At US$209, Is It Time To Put Westinghouse Air Brake Technologies Corporation (NYSE:WAB) On Your Watch List?

Westinghouse Air Brake Technologies Corporation (NYSE:WAB) saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. The company is now trading at yearly-high levels following the recent surge in its share price. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Westinghouse Air Brake Technologies’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Westinghouse Air Brake Technologies

What's The Opportunity In Westinghouse Air Brake Technologies?

According to our valuation model, Westinghouse Air Brake Technologies seems to be fairly priced at around 3.42% above our intrinsic value, which means if you buy Westinghouse Air Brake Technologies today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $201.96, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Westinghouse Air Brake Technologies’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Westinghouse Air Brake Technologies look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Westinghouse Air Brake Technologies' earnings over the next few years are expected to increase by 66%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? WAB’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on WAB, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Westinghouse Air Brake Technologies at this point in time. Case in point: We've spotted 1 warning sign for Westinghouse Air Brake Technologies you should be aware of.

If you are no longer interested in Westinghouse Air Brake Technologies, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.