Dissecting WABCO Holdings Inc. (WBC)’s Returns

Cummins Inc. (NYSE:CMI), like WABCO, has seen revenues start to lag even though stricter regulations and improvements in the efficiency of the two’s products has increased demand. And, there was some fear that headwinds faced by one of Cummins’ largest customers would drag revenues down further but most of those worries were stomped out after PACCAR Inc (NASDAQ:PCAR) beat earnings expectations.  Either way, these two are well positioned to take advantage of demand for better, safer and more environmentally friendly auto parts as the economy picks up and their main customers continue to grow.

Foolish Bottom Line

WABCO has not been immune to the tough macro environment that saw net income turn negative during the financial crisis, but it has escaped from those challenges and is back to its very profitable ways.  No company can expect to return over 40% indefinitely, but WABCO appears to be maintaining its breakneck speed and shares reasonably reflect the company’s out performance.  Something that the above evaluation indicates could continue for quite some time.

joshua kubiak has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article Dissecting WABCO’s Returns originally appeared on Fool.com and is written by joshua kubiak.

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