Ricardo Pillai
3 min read
In This Article:
We came across a bullish thesis on Wabash National Corporation (WNC) on Substack by DeepValue Capital. In this article, we will summarize the bulls’ thesis on WNC. Wabash National Corporation (WNC)'s share was trading at $9.25 as of May 12th. WNC’s trailing P/E was 6.13 according to Yahoo Finance.
A tractor-trailer speeding along a modern highway, showing the power of the transportation solutions.
Wabash National Corporation (WNC), widely perceived by the market as a “busted trailer stock,” is quietly positioning itself for a significant turnaround as the freight cycle begins to reset. Despite a sharp 70% decline in its stock price over the past year, Wabash is not merely a cyclical metal bender—it is transforming into a modern, vertically integrated logistics solutions provider with growing exposure to higher-margin aftermarket services, trailer technology innovation, and subscription-based models. Its core business remains in transportation solutions, including dry and refrigerated trailers, tankers, and flatbeds, but WNC has strategically expanded into aftermarket parts and services and invested in ESG-friendly innovations like DuraPlate® and EcoNex™ materials. It is also exploring emerging segments like electric and autonomous trailers and Trailers-as-a-Service (TaaS), targeting long-term fleet contracts that could provide recurring revenue. Joint ventures like the Wabash Marketplace (Fernweh) and Wabash Parts (HTI) are efforts to digitize operations and scale aftermarket margin streams, reinforcing the shift beyond just manufacturing.
The cyclical downturn in trailer demand—down ~30% in 2024—has depressed results, but signs of recovery are building. Backlogs now cover nine months of production, and the company expects 2025 deliveries to rise year-over-year but still fall below replacement demand, implying a likely rebound in 2026. Wabash’s management is proactively executing a “downturn playbook,” aggressively cutting costs to align with current demand while preparing to capitalize on the next upturn. Financial discipline remains strong, with historical capital returns (ROIC and ROCE) averaging ~13% between 2016 and 2023, and buybacks reducing the share count by 5% annually over the same period—clear signs of shareholder-friendly capital allocation. These moves, combined with the operational reset, suggest that WNC could be at the early stages of a multi-year recovery cycle.
If free cash flow returns to $200 million at the peak of the next cycle—a level previously reached—a conservative 6x multiple implies a $1.2 billion valuation, more than triple its current ~$349 million market cap. That would represent 243% upside or a 51% CAGR over three years, assuming execution aligns with macro trends. Questions remain about WNC’s ability to monetize newer segments like TaaS and electrification, the sustainability of demand across cycles, and how management’s track record will hold in a full rebound. Still, the combination of rising backlogs, strong buyback discipline, and optionality from tech and services presents an asymmetric risk/reward. If the freight cycle turns and management executes, Wabash could evolve from a discarded cyclical into a 3x opportunity over the next few years.
