WAB headed into the second half of May down 5.1% on the week — and the options market just sent its sharpest defensive signal of the past month.
Options positioning has turned meaningfully more cautious than normal. The put/call ratio jumped to 0.655 on Tuesday, more than two standard deviations above its 20-day average of 0.507, landing at its highest reading in over a month. For a stock that has spent most of the past year with a PCR comfortably below 0.5, the move stands out. Traders are paying more for downside protection than they have in weeks, even as short sellers show little urgency to press the position.
The lending market tells a calm story. Short interest has drifted lower through the week, edging down to 1.7% of the free float — modest by any measure and well within normal range. Borrow costs are at their lowest in 30 days, running at 0.34% annualised after falling roughly 32% over the week. Availability is entirely loose, with over 145 million shares available to borrow relative to the roughly 2.9 million currently shorted. There is no squeeze pressure here, no crowded trade, and no sign that bears are adding conviction despite the price weakness.
Insiders, however, have been consistent sellers. CEO Rafael Santana sold shares on both May 4 and May 5 across multiple small tranches, alongside General Counsel David DeNinno ($664k on May 5) and EVP Gregory Sbrocco ($982k). The 90-day net across all insiders shows roughly 75,500 shares sold, representing around $20.1 million in aggregate value. The individual trades carry low significance scores, and selling by CEO tenure-holders via plan-style transactions is common. Still, the directional read is unambiguous: no insider has been a net buyer over this window.
The analyst community remains broadly constructive, though it has grown more selective. The mean price target of $300 implies roughly 17.5% upside from current levels. The most recent moves, all within the past month, were mixed in direction: Wells Fargo raised its target to $284 while holding Equal-Weight, and Citi maintained Buy with a $292 target, while JP Morgan trimmed its Neutral target to $280. The consensus points to a stock trading at a discount to where most of the Street thinks it should be, with a P/E near 22.8x — down about 1.5 points over the past 30 days — and an EV/EBITDA of 15.9x, also compressing. That multiple contraction has accompanied the price decline rather than following an earnings disappointment; WAB beat Q1 expectations in April, sending the stock up 4.6% the day of results, before the subsequent pullback gave back most of those gains and more.
The forward earnings picture supports the bull case from a momentum perspective. The 12-month forward EPS estimate growth factor ranks in the 74th percentile, and near-term EPS momentum ranks at 63. The $22 billion order backlog cited by bulls underpins confidence in revenue visibility. Bears counter with the risk of a global industrial slowdown and compression in domestic rail markets — risks that have become more tangible given the broader industrial peer group's weakness this week. Closest correlates TEX and GTES fell 13.3% and 8.7% respectively; PH and DOV held up better, both losing under 5%. WAB's 5.1% decline lands roughly in the middle of the peer group, neither outperforming nor taking the worst of the selling.
The next catalyst is July 22, when WAB reports Q2 results. That print arrives with the stock about 5% below its post-Q1 highs, options traders carrying more hedges than usual, and insiders who have shown no inclination to step in and buy the dip. What to watch between now and then is whether the put/call ratio normalises or continues to build — a sustained elevation above 0.65 through June would suggest the options market is pricing in more than just week-to-week noise.
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