Monday, February 26, 2018

Bombardier Inc.

Sound bite for Twitter and StockTwits is: Maybe recovering Industrial. I sold because I got tired of waiting for the company to improve. Yes the stock price has been going up recently, but I did not like it having a negative book value and all the delays in producing street cars for Toronto and in CSeries plane deliveries. See my spreadsheet on Bombardier Inc.

I do not own this stock of Bombardier Inc. (TSX-BBD.B, OTC-BDRBF) but I used to. I had had this stock from 1987 and sold in November of last year.. I made 11.08% per year on the stock with 5.69% from capital gains and 5.39% from dividends. This stock has had dividends off and on.

This company did well in the 2001 bull market, but then crashed in 2002 and has never really recovered. It was a great stock when I bought it as it kept rising and splitting and rising and splitting. However, those days seem long past.

When I bought this stock in 1987 it was paying dividends and they paid dividends to 2004. They had earnings losses in 2003 to 2005 so in 2004 it was clear that they could not afford dividends. They restarted the dividends in 2009 and stopped them again in 2014. They stopped the dividends when they had an earnings loss in 2014.

If you look at long term returns which have up to 30 years ago, shareholders owning this stock for 25 to 30 years have made money. For all other time periods, shareholders have losses. The total loss over the past 5, 10, 15 and 20 years is at 3.10%, 3.21%, 2.19% and 2.65% per year. The capital loss over these periods was 4.23%, 4.79%, 3.44% and 4.11% per year. The portion of total return attributable to dividends over these periods was 1.12%, 1.58% , 1.25% and 1.46%.

For shareholders who have held this stock for 25 and 20 years their total return is 6.64% and 11.25%. The portion of this total return attributable to capital gain is 2.99% and 5.92%. The portion of this total return attributable to dividends is 3.65% and 5.33%. Another point to make is that this stock is up by 197% over the past 3 years.

The 5 year low, median and high median Price/Earnings per Share Ratio are negative and therefore they are of no use. The 10 year ratios are 5.09, 9.09 and 13.09. The historical ratios are 10.78, 15.12 and 18.59. The current P/E Ratio is 52.36 with next year's lower at 19.64. The current P/E Ratio is based on a stock price of $3.98 and 2018 EPS of $0.08 CDN$ ($.06 US$). The 2019 P/E Ratio is based on a stock price of $3.98 and 2019 EPS of $0.20 CDN$ ($0.16 US$). It is probably reasonable to look forward as it will take time for this stock to recover its EPS. However, this testing does suggests that the stock price is relatively high.

I cannot get a Graham Price as the Book Value is negative and has been since 2014. I also cannot do a Book Value stock price test because of the negative Book Value. To me a negative book value is really bad. I also cannot do a dividend yield test for the stock price as the company no longer has a dividend.

I get a 10 year median Price/Sales (Revenue) Ratio of 0.37 US$. The current P/S Ratio is 0.40 US$. This is based on Revenue estimate for 2018 of $17,617M US$, Revenue per Share of $7.84 US$ and a stock price $3.15 U$. The current P/S Ratio is some 9% higher than the 10 year median. This stock price testing suggests that the stock price is relatively reasonable but above the median.

When I look at analysts' recommendations I find Strong Buy (3), Buy (12) and Hold (5). The consensus is a Buy. The 12 month stock price consensus is $3.41 US$ or $4.32 CDN$. This implies a total return of 8.54% of capital gain.

Demetris Afxentiou of Motley Fool thinks it might be time to buy this stock. Frederic Tomesco of Bloomberg in the Toronto Star says the company is doing well under their new CEO Alain Bellemare. On a more negative note, Frederic Tomesco of Bloomsbert in the Montreal Gazette says that the company got a public scolding because of delays in suppling street cars to Toronto and missing out on transit contracts for Montreal and NYC. See what analysts are saying on Stock Chase . They have mixed views.

Bombardier Inc. is engaged in manufacturing planes and rails. It designs business jets, commercial aircraft, and aircraft structural components such as fuselages, wings and engine nacelles. The company also provides full spectrum of rail solutions. Its web site is here Bombardier Inc .

The last stock I wrote about was about was Canadian Real Estate Investment Trust (TSX-REF.UN, OTC-CRXIF)... learn more. The next stock I will write about will be Atrium Mortgage Investment Corp (TSX-AI, OTC-AMIVF)... learn more on Wednesday, February 28, 2018 around 5 pm. Tomorrow on my other blog I will write about My Best Investments.... learn more on Tuesday, February 27, 2018 around 5 pm.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

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