Westinghouse Air Brake Technologies Corporation’s (NYSE:WAB) Stock Has Shown A Decent Performance: Have Financials A Role To Play?

Westinghouse Air Brake Technologies’ (NYSE:WAB) stock is up by 9.4% over the past three months. Given that stock prices are usually aligned with a company’s financial performance in the long-term, we decided to investigate if the company’s decent financials had a hand to play in the recent price move. Specifically, we decided to study Westinghouse Air Brake Technologies’ ROE in this article.

ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders. In short, ROE shows the profit each dollar generates with respect to its shareholder investments.

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ROE can be calculated by using the formula:

Return on Equity = Net Profit (from continuing operations) ÷ Shareholders’ Equity

So, based on the above formula, the ROE for Westinghouse Air Brake Technologies is:

11% = US$1.2b ÷ US$11b (Based on the trailing twelve months to September 2025).

The ‘return’ is the yearly profit. Another way to think of that is that for every $1 worth of equity, the company was able to earn $0.11 in profit.

View our latest analysis for Westinghouse Air Brake Technologies

So far, we’ve learned that ROE is a measure of a company’s profitability. We now need to evaluate how much profit the company reinvests or “retains” for future growth which then gives us an idea about the growth potential of the company. Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don’t share these attributes.

On the face of it, Westinghouse Air Brake Technologies’ ROE is not much to talk about. However, given that the company’s ROE is similar to the average industry ROE of 12%, we may spare it some thought. Particularly, the exceptional 22% net income growth seen by Westinghouse Air Brake Technologies over the past five years is pretty remarkable. Given the slightly low ROE, it is likely that there could be some other aspects that are driving this growth. For instance, the company has a low payout ratio or is being managed efficiently.

Next, on comparing with the industry net income growth, we found that Westinghouse Air Brake Technologies’ growth is quite high when compared to the industry average growth of 15% in the same period, which is great to see.