Wabash National: A Better Buy Than Navistar?

Wabash National Corp.

Introduction:

Wabash National Corporation (NYSE:WNC) manufactures semi trailers in North America. The company specializes in the design and production of dry freight vans, refrigerated vans, flatbed trailers, drop deck trailers, dump trailers, truck bodies and intermodal equipment. Wabash National Corporation was founded in 1985 and is headquartered in Lafayette, Indiana.

Stock Snapshot:

As of Nov 27’ 2012, the stock for Wabash National Corporation (NYSE:WNC) stood at USD 7.84 representing a total market capitalization of USD 546.07 million. The stock has traded between a range of USD 5.65 and USD 11.55 over the last 52 weeks. The stock has witnessed an average volume of 819,423 shares over the last 3 months.

Major Competitors:

Navistar International Corp (NYSE:NAV), through its subsidiaries, manufactures and sells commercial and military trucks, buses, diesel engines, recreational vehicles (RVs), and chassis, as well as provides service parts for trucks and trailers. The stock for Navistar International Corporation stood at USD 20.24 as at 27^th Nov’ 2012. The stock has traded between a range of USD 18.17 and USD 48.18 over the last 52 weeks. The stock has witnessed an average volume of 2,187,920 shares over the last 3 months.

Multiple Analysis:

The stock for Wabash National Corporation (NYSE:WNC) has been trading at a price to earnings ratio of 16.7 and a price to sales ratio of 0.39 and a price to book ratio of 2.74. In comparison, the stock for Navistar International Corp (NYSE:NAV) has been trading at a price to earnings ratio of 103 and a price to sales ratio of 0.10.

Financial Highlights:

For 9MFY12, the Company recorded net sales of USD 1,046 million as compared to USD 845.5 million in the corresponding period last year. The net sales figure increased by USD 140.8 million as a result of the acquisition of Walker completed on May 8’ 2012.
During 9mfy12, the new trailer volumes increased by approximately 600 units or 1.8% compared to the corresponding period last year.
During 9MFY12, commercial trailer products segment sales were USD 756.6 million which represented a growth of 5.2% compared to the corresponding period last year. The increase in sales was mainly due to a 5.6% YoY increase in average selling prices. The prices increased mainly due to increased pricing necessary to offset higher raw material costs as well as favorable customer and product mix.
Diversified Products segment sales, net of intersegment sales, were recorded at USD190.9 million for 9MFY12, representing a YoY growth of 469.9%. The increase in sales was primarily driven by the inclusion of Walker which added USD 140.8 million to sales results since the date of acquisition.
Retail segment sales were USD 98.5 million in 9mfy12 which represented a YoY growth of 6.5%, compared to the corresponding period last year.
For 9MFY12, the Company reported gross profit margin of 10.5% which was higher than the gross profit margin of 5.4% recorded in the corresponding period last year. Cost of sales for 9MFY12 were USD 936.5 million, which represented a YoY increase of 17.1% compared to the corresponding period last year.
The Company’s capital structure is comprised of a mix of debt and equity. As of September 30, 2012, the debt to equity ratio stood at approximately 2.1:1.0.
For 9MFY12, the cash provided by operating activities totaled USD 27.5 million, compared to USD 22.4 million used in operating activities in the same period in 2011.
Capital spending amounted to USD 9.0 million for the first nine months of 2012 and is anticipated to be in the range of USD 13 million to USD 15 million in the aggregate for 2012.