Wednesday, September 30, 2009

Bombardier Inc.

I am reviewing this stock (TSX- BBD.B) today as I received the January 2009 annual report and I have not reviewed it since I received this report. I bought my shares in this company in 1987. I have only tracked this stock in Quicken since 1988 and since that time, I have made a return of some 14% per year. However, this company has had a lot of ups and downs since I bought it. Since I bought this company way before the huge run up in its price in 2000/2001, I have done quite well. However, if anyone has bought this stock around 1996 or later, they probably have made no money on it.

This company ran into serious problems in 2004 and first cut their dividend and then stop paying dividends altogether. In was just in late 2008 that the company started to pay dividends again. I bought this stock quite early and I have hung on to it. It is hard to say whether that was wise or not. When you look at the growth of certain figures like revenue and earnings for the last 5 years, they are practically none existent. However, a lot of figures have started to pick up in 2005 and 2006. Revenues have been rising since 2005 and earnings have been rising since 2006.

When I look at the Liquidity Ratio and the Asset/Liability ratios, I find them both quite low at 1.19. I like to see both these figures at 1.50 and above. However, they are at least over 1.00. This means that the current assets can cover the current liabilities and also the assets can cover the liabilities. This stock has never had high scores in liquidity at any time that I can see.

In looking at the Return on Equity, these figures of late have not been bad. Bombardier had a particularly good year end in January 2009. It looks also from the recent 2nd quarterly report, that Bombardier will have another good year. The net earnings are good. However, what I do not like is that the Operating Cash Flow was negative for the first quarter and this has also affected to Operation Cash Flow to date. This has resulted in a very high Accrual Ratio. Hopefully this will be corrected before the end of their next fiscal year.

Currently, I am going to hold on to my shares. I have no intentions of buying any more. I will look at see why stock analysts are saying about this stock tomorrow.

Bombardier is a world-leading manufacturer of innovative transportation solutions, from commercial aircraft and business jets to rail transportation equipment, systems and services. Headquartered in Montréal, Canada, Bombardier has a presence in more than 60 countries. Its web site is See my spreadsheet at

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at for a list of the stocks for which I have put up spreadsheets.

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