Bombardier Inc 2

I started a new blog for investment and economic comments at blogger and I have commented on the markets.

I own this stock (TSX-BBD.B). ). I first bought this stock in 1987 and I have made a return of 12.9% per year with 4.4% per year return due to dividends and 8.5% per year due to capital gain. I have certainly been though a lot of ups and downs with this stock.

When I look at insider trading, I find a small amount of insider selling and a small amount of insider buying with a net of insider selling. Insiders not only have options, but they have Deferred Stock Units and Performance Share Units. The CEO and CFO both have more options than shares. The majority of the officers do also, with a couple of exceptions for family members who own lots of shares. The Directors do have more Deferred Stock Units and Performance Share Units than shares.

As far as I can see there are very few institutional owners (some 13) who own 2.3% of the outstanding shares. The institutions have bought a sold a bit over the last 3 months; and have reduced their holdings marginally. Also, according to NASDAQ site, Mclean Budden Ltd sold some 75M shares of Bombardier in December 2011. However, this company buys and sells a lot of stocks. See NASDAQ. This is interesting, but does not tell us much.

I get 5 year median low and high Price/Earnings Ratios of 7.45 and 14.49, a rather low range. The current P/E of 8.54 on a price of $3.99 would suggest a low current stock price.

I get a Graham Price of $1.33. It is low because the book value has crashed. The low and high difference between the Graham Price and stock price is the stock price being 8.5% and $128% higher than the Graham Price. By this measure the stock price is high. However, before the book value crashed the Graham Price was $4.65, which is higher than the current stock price.

The Price/Book Value Ratio is also not going to tell us much either because of the crash in the Book Value. The 10 year P/B Ratio is 2.42 and the current ratio is 23.81

The 5 year median dividend yield is 1.88% and the current yield is 33% higher at 2.51%. If you do not know what measurement to believe on stock price, it is usually a good idea to go with the dividend yield test. In this case it says the stock price is low. (However, the crash of the book value is a bit worrying.)

When I look at analysts’ recommendations I find Strong Buy, Buy, Hold and Underperform. The consensus recommendation would be a Buy. One Hold recommendation comes with a 12 months stock price of $5.00. A Strong Buy comes with a 12 month stock price of $6.95.

One analyst says that the company can burn through a lot of its cash flow. One analyst thinks it is a buy because the global economy will recover and there will be industrial boom. One analyst gave it a Don’t Buy because she felt there was no catalyst to drive the company forward even though the stock was cheap.

There is an article on G&M about the C Series aircraft which is upbeat. See G&M. There is also another article with a negative point of view on Bombardier’s Q400 plane. See G&M.

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. The Bombardier family controls 64% of the voting rights under this stock. Its web site is here AltaGas. See my spreadsheet at bbd.htm.

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 for stocks followed and investment notes. Follow me on twitter.