Wabtec outperforms UPS in 2025, with better earnings outlook and more attractive investment option

From Nasdaq: 2025-05-26 12:35:00

UPS and Wabtec Corporation, two key players in the Transportation sector, have both announced dividend hikes despite economic uncertainties. Dividend-paying stocks like these provide stable income and act as a hedge against market volatility. In February, Wabtec raised its quarterly cash dividend by 25%, while UPS increased their quarterly dividend to $1.64 per share.

While UPS’ dividend hike reflects a shareholder-friendly approach, concerns arise about its sustainability due to an elevated payout ratio. Free cash flow has declined since the peak pandemic period, impacting UPS’ operational flexibility. On the other hand, Wabtec’s lower payout ratio indicates a more sustainable dividend policy.

Wabtec has outperformed UPS in 2025, with a 5.1% gain compared to UPS’ double-digit decline. Wabtec’s focus on new technologies and restructuring initiatives has driven its growth, while UPS faces revenue weakness due to geopolitical uncertainty and high inflation affecting consumer sentiment.

Analysts expect Wabtec’s sales to increase in 2025 and 2026, with a drop in EPS for 2025 and an increase for 2026. Meanwhile, UPS is projected to see a decrease in sales for 2025 and a slight increase for 2026, with declining EPS estimates. Wabtec’s better earnings outlook reflects its strong performance.

Wabtec’s higher valuation compared to its historical median suggests investors are willing to pay a premium for the stock. With a lower dividend payout ratio and better price performance, Wabtec appears to be a more attractive investment option than UPS currently. Wabtec is ranked #2 (Buy) by Zacks, while UPS is ranked #5 (Strong Sell).



Read more at Nasdaq: UPS vs. WAB: Which Dividend-Paying Transportation Stock to Bet on Now?