Why Shares of Wabash National Corporation Fell Today

Shares of the nation's leading truck-trailer manufacturer fell on an analyst downgrade.

Jeremy Bowman
Jeremy Bowman
Jun 14, 2016 at 5:03PM
Industrials

Image source: The Motley Fool. 

What: Shares of Wabash National Corporation (NYSE:WNC) were sliding today, as Stifel downgraded the company. As of 3:29 p.m. ET, the stock was down 8.7% and had fallen as much 10.4%.

So what: The research firm lowered its rating on the truck-trailer maker from "hold" to "sell," saying it expects it to miss semi-trailer production expectations in 2017-2018, which could lead to an earnings miss. It also put an $11 price target on the stock. It wasn't clear if there was any further justification for the downgrade. 

Now what: The manufacturer is coming off its best first quarter ever and boosted its full-year outlook as adjusted earnings per share more than doubled from the prior-year period to $0.42. Revenue growth was tepid at just 2%, but the company has consistently blown past analyst estimates in recent quarters, beating an EPS estimate of just $0.24 in its latest report as gross margin improved by 470 basis points. Wabash also lifted its full-year EPS guidance to $1.65-$1.75, a 14% increase at the midpoint from last year.

The truck-trailer market is closely tied to the overall economy, so profits should continue to grow if the economy keeps expanding. While analysts are expecting earnings to dip next year, long-term prospects for Wabash still look strong.