I do not own this stock of Bombardier Inc (TSX-BBD.B, OTC-BDRBF), but I used to. The buying of this stock was part of my early foray into industrial stocks in 1987. Up until 2001, I was making some 35% return per annum on this stock. When the stock first dropped in 2002, I had still made some 28% return per annum on this stock. Even by the lowest point in 2005, I had made some 13% per annum on this stock. By that time, it seemed to be turning itself around, so I did not sell. I lost hope by 2017, so I sold. I made 11.08% per year with half from dividends.
When I was updating my spreadsheet, I noticed it is still a bad investment as it has been since it hit a high in 2001. Still has some awful debt ratios and a negative book value.
It has paid dividends in the past, but none since 2014.
Debt Ratios are awful. The Long Term Debt/Market Cap Ratio for 2019 is 2.65. This means that the long term debt is more than twice what the market value of the stock is. This is a really bad ratio. The Liquidity Ratio is 0.88 and with cash flow added in, it is 0.92. The current assets cannot cover current liabilities. The Debt Ratio is 0.81, so the company has a negative book value. Free Cash Flow is negative and has been since 2012.
The Total Return per year is shown below for years of 5 to 33 to the end of 2019 CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2014 | 5 | 0.00% | -14.20% | -14.20% | 0.00% |
| 2009 | 10 | 0.00% | -7.89% | -9.15% | 1.26% |
| 2004 | 15 | 0.00% | -0.11% | -2.02% | 1.91% |
| 1999 | 20 | 0.00% | -8.69% | -9.64% | 0.95% |
| 1994 | 25 | 0.00% | 1.26% | -1.53% | 2.79% |
| 1989 | 30 | 0.00% | 7.19% | 2.37% | 4.82% |
| 1986 | 33 | 0.00% | 5.18% | 1.50% | 3.68% |
The Total Return per year is shown below for years of 5 to 30 to the end of 2019 US$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2014 | 5 | 0.00% | -16.35% | -16.35% | 0.00% |
| 2009 | 10 | 0.00% | -9.71% | -11.05% | 1.34% |
| 2004 | 15 | 0.00% | -0.10% | -2.39% | 2.29% |
| 1999 | 20 | 0.00% | -8.05% | -9.19% | 1.14% |
| 1994 | 25 | 0.00% | 1.72% | -1.25% | 2.97% |
| 1989 | 30 | 0.00% | 6.46% | 2.03% | 4.44% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are all negative. The corresponding 10 year ratios are 3.50, 5.19 and 6.66. The corresponding historical ratios are 10.78, 15.12 and 18.59. The EPS is expected to be negative both this year and next. We cannot do any P/E Ratio testing.
I get a Graham Price of $0. The problem is the book value is negative. I cannot calculate a P/GP Ratio when the book value is negative.
I get a 10 year median Price/Book Value per Share Ratio that is negative. I cannot do this test. I cannot do the dividend yield test as there are currently no dividends.
The 10 year median Price/Sales (Revenue) Ratio is 0.36. The current P/S Ratio is 0.12 based on 2020 Revenue estimate of $15,765M, Revenue per Share of $6.58 and a stock price of $1.60. The current ratio is 66% lower than the 10 year ratio.
Results of stock price testing is that the stock price is probably cheap. However, it is never a good sign when I cannot do the majority of my tests.
Is it a good company at a reasonable price? I do not know how anyone can recommend this stock. I find it doubtful that it will ever do well again. What I find interesting is the products that started Bombardier (like the ski-doo) under a new company of BRP Inc (TSX-DOO, NASDAQ-DOOO) is doing well.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (6), Hold (6) and Sell (1). The consensus would be a Buy. The 12 month stock price is $1.65 US$ or $2.20 CDN$. This implies a total return of 37.79% all from capital gains.
See what analysts are saying on Stock Chase. There are lots of Don’t Buy on this site. Karen Thomas on Motley Fool talks about the company becoming a speck of what it used to be. A writer on Simply Wall Street says that the company’s ROCE is mediocre. A writer on Simply Wall Street says that the company is paying its CEO too generously. CBC news via Yahoo talks about the sale of the train division of Bombardier.
Bombardier manufactures transportation solutions, from commercial aircraft and business jets to rail transportation equipment and related services. Its web site is here Bombardier Inc.
The last stock I wrote about was about was Emera Inc (TSX-EMA, OTC-EMRA) ... learn more. The next stock I will write about will be Home Capital Group (TSX-HCG, OTC-HMCBF) ... learn more on Wednesday, March 4, 2020 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks March 2020.... learn more on Tuesday, March 3, 2020 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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