I do not own this stock of Bombardier Inc (TSX-BBD.B, OTC-BDRBF), but I used to. I held this stock from 1987 to 2017 when I give up on it. However, this investment was not a bad one for me. I had a total return of 9.15% with 3.92% from capital gains and 5.23% from dividends. This was a dividend paying stock when I bought it.
When I was updating my spreadsheet, I noticed that it is a shadow of its former self. When I invested in this company in 1987, it had three divisions of skidoos, planes, and trains. They sold off the skidoos a long time ago now and just recently sold off the train division. They now only made planes and they have not made a profit since 2014. The only “green” on my spreadsheets shows less bad results. For example, over the last 5 years EPS went from a loss of $3.57 CDN$ to a loss of just $0.47. It has a negative book Value. This means that the breakup value of the company is less than $0.
This stock is no longer a dividend paying stock. Although it is possible, if it recovers at all, to become one again. The stock was dividend paying when I bought it in 1987. Dividend were suspended between 2005 and 2009. They have paid no dividends since 2015. In the 34 years of coverage, I have of this stock, dividends were increased 17 times and cut 8 times.
When they did pay dividends, the DPR for EPS was in a low range, the ranges of 20% mostly.
Debt Ratios are awful. The Long Term Debt/Market Cap Ratio for 2020 is 8.91, a very high number. It means that Long Term Debt is 8.91 times the value of the company by Market Cap. The current Liquidity Ratio is awful. It is 0.99. It has a negative cash flow, so this does not help either. The Debt Ratio is 0.78. This means that the assets cannot cover the liabilities. It has a negative book value. That is if the company is broken up, it cannot pay all its debts.
The Total Return per year is shown below for years of 5 to 34 to the end of 2020 in CDN$. 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. |
|---|---|---|---|---|---|
| 2015 | 5 | 0.00% | -18.56% | -18.56% | 0.00% |
| 2010 | 10 | 0.00% | -20.84% | -21.95% | 1.11% |
| 2005 | 15 | 0.00% | -8.51% | -11.46% | 2.95% |
| 2000 | 20 | 0.00% | -16.69% | -17.86% | 1.17% |
| 1995 | 25 | 0.00% | -5.63% | -8.93% | 3.30% |
| 1990 | 30 | 0.00% | 5.51% | -2.37% | 7.87% |
| 1986 | 34 | 0.00% | 3.54% | -2.61% | 6.15% |
The Total Return per year is shown below for years of 5 to 31 to the end of 2020 in 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. |
|---|---|---|---|---|---|
| 2015 | 5 | 0.00% | -16.92% | -16.92% | 0.00% |
| 2010 | 10 | 0.00% | -22.64% | -23.72% | 1.08% |
| 2005 | 15 | 0.00% | -8.74% | -12.04% | 3.30% |
| 2000 | 20 | 0.00% | -15.70% | -17.16% | 1.46% |
| 1995 | 25 | 0.00% | -5.02% | -8.62% | 3.59% |
| 1990 | 30 | 0.00% | 4.55% | -2.64% | 7.19% |
| 1989 | 31 | 0.00% | 4.74% | -2.39% | 7.14% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are negative. The corresponding 10 year ratios are all negative. The corresponding historical ratios are 10.53, 14.53 and 17.41. The current ratio is negative. This test cannot be done.
The Graham Price cannot be calculated because the EPS is negative and the Book Value is negative. The Price/Book Value per Share Ratio cannot be done because the Book Value is negative. I cannot do any dividend yield tests because the dividend is suspended.
I get a 10 year median Price/Cash Flow per Share Ratio of 7.92. The Cash Flow per Share is expected to be negative in 2021, but positive in 2022. In 2022, the P/CF Ratio is 13.50 based on Cash Flow per Share of $0.04, Cash Flow of $97 and a stock price of $0.54. The 2022 ratio is 71% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This is in US$ and you would get a similar result in CDN$.
I get a 10 year median Price/Cash Flow per Share Ratio of 7.92. The Cash Flow per Share is expected to be negative in 2021, but positive in 2022 and in 2023. In 2023, the P/CF Ratio is 3.86 based on Cash Flow per Share of $0.14, Cash Flow of $339 and a stock price of $0.54. The 2023 ratio is 51% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This is in US$ and you would get a similar result in CDN$.
The 10 year median Price/Sales (Revenue) Ratio is 0.30. The current P/S Ratio is 0.22 based on a stock price of $0.54, Revenue estimate for 2021 of $5,849M and Revenue per Share of $2.42. The current ratio is 25% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This is in US$ and you would get a similar result in CDN$.
Results of stock price testing is that the stock price is probably cheap. There is not much testing that can be done on this stock. However, the P/S Ratio says the stock price is cheap and my second P/CF Ratio test says the same thing.
Is it a good company at a reasonable price? The stock price is cheap. However, who wants to buy a stock with a negative book value? Personally, I have given up on this stock and the possibility it might recover at some time in the future.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (3), Hold (8), Underperform (2) and Sell (2). So, the recommendations are all over the place. The consensus would be a Hold. The 12 month stock price consensus is $0.75CDN$ ($0.59 US$). This implies a total return of 6.8% all from capital gains.
Analysts’ on Stock Chase say do not buy even though the site gives it 3 stars out of 5 which make no sense. Puja Tayal on Motley Fool says this is a short term contrarian buy. He says to buy at $0.70 and sell at $0.95 or $1.00. The Executive Summary on Simply Wall Street gives this stock one star out of 5 and list 3 negatives. A writer on Simply Wall Street thinks the CEO is being paid too much, relatively. Greg Newman on BNN Bloomberg thinks there is a case for buying Bombardier. There is another case for buying this stock on Super Charged Stocks. There are also comments on Reddit.
Bombardier Inc is engaged in the manufacture of business aircraft. It designs, manufactures, markets, and provides aftermarket support for Learjet, Challenger, and Global business jets, spanning from the light to large categories; designs manufactures, and provides aftermarket support for a broad portfolio of commercial aircraft. 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 Friday, March 12, 2021 around 5 pm. Tomorrow on my other blog I will write about My Transportation Stocks.... learn more on Thursday, March 11, 2021 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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