Is it a good company at a reasonable price? The stock price would seem to be relatively expensive at this point. I can only really do a P/S Ratio test. This also implies that the company is not doing well. A number of analysts feel that the company does have a future just building planes. However, any purchase of this company is highly speculative.
I do not own this stock of Bombardier Inc (TSX-BBD.B, OTC-BDRBF). 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.
When I was updating my spreadsheet, I noticed that they made a profit because of income from discontinued operations. At one time this was a great stock and I owned it. I did make money on it and have not owned it for quite some time now.
If you had invested in this company in December 2011, $102.82 you would have bought 247 shares at $4.06 per share. In December 2021, after 10 years you would have received $74.96 in dividends. The stock would be worth $414.95. Your total return would have been $489.92.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $4.06 | $1,002.82 | 247 | 10 | $74.96 | $414.96 | $489.92 |
This stock did pay dividend in the past. I have data back to 1987 and from 1987 to 2004, there were dividends. Also, the company paid dividends between 2009 and 2014. There have been no dividends since 2009 and no current hope of any.
Debt Ratios are awful. The Long Term Debt/Market Cap Ratio is 2.24. It is better than last year of 8.91. However, the long term debt is still over twice the value of the company. The Liquidity Ratio is low at 1.15. The Debt Ratio is negative because there is a negative book value. This mean that in bankruptcy there would not be enough money to even pay outstanding debts. The Leverage and Debt/Equity Ratios cannot be calculated because the book value is negative.
The Total Return per year is shown below for years of 5 to 35 to the end of 2021 in CDN$. 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. |
|---|---|---|---|---|---|
| 2016 | 5 | 0.00% | -4.90% | -4.90% | 0.00% |
| 2011 | 10 | 0.00% | -7.60% | -8.45% | 0.85% |
| 2006 | 15 | 0.00% | -4.99% | -6.33% | 1.34% |
| 2001 | 20 | 0.00% | -9.56% | -10.28% | 0.72% |
| 1996 | 25 | 0.00% | -3.70% | -5.27% | 1.57% |
| 1991 | 30 | 0.00% | 2.31% | -0.80% | 3.11% |
| 1986 | 35 | 0.00% | 4.83% | 1.01% | 3.81% |
The Total Return per year is shown below for years of 5 to 35 to the end of 2021 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. |
|---|---|---|---|---|---|
| 2016 | 5 | 0.00% | -3.89% | -3.89% | 0.00% |
| 2011 | 10 | 0.00% | -9.55% | -10.38% | 0.83% |
| 2006 | 15 | 0.00% | -5.28% | -6.81% | 1.53% |
| 2001 | 20 | 0.00% | -8.27% | -9.23% | 0.95% |
| 1996 | 25 | 0.00% | -3.37% | -5.05% | 1.68% |
| 1991 | 30 | 0.00% | 1.82% | -1.07% | 2.89% |
| 1989 | 32 | 0.00% | 6.09% | 1.56% | 4.54% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are all negative. The corresponding 10 year and historical P/E Ratios are also negative. We can do no testing with the P/E Ratios.
I get a Graham Price of $0. The 10 year low, median, and high median Price/Graham Price Ratios are all $0. There have been no positive earnings between 2014 and the Book Value has been negative since 2014 and is still negative, the Graham Price cannot be calculated because there isn’t one.
I cannot calculate a 10 year median Price/Book Value per Share Ratio because the Book Value is negative. So, we cannot do a P/B Ratio test.
I get a 10 year median Price/Cash Flow per Share Ratio of 6.79. The current P/CF Ratio is 52.50 based on Cash Flow per Share for 2022 of $0.02 and a stock price of $1.33. The current ratio is 673% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Cash Flow per Share Ratio of 6.79. The 2023 P/CF Ratio is 6.18 based on Cash Flow per Share for 2023 of $0.17 and a stock price of $1.33. The current ratio is 9% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
There have not been any dividends paid for some time, so no dividend yield test can be done.
The 10 year median Price/Sales (Revenue) Ratio is 0.30. The current P/S Ratio is 0.38 based on Revenue estimate for 2022 of $6,650M, Revenue per Share of $2.79 and a stock price of $1.33. The current ratio is 26% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is that the stock price is probably on the expensive side. This is because of the results of P/S testing, which is the only clean test. The results of a forward P/CF Ratio test are that the stock price is reasonable.
Last year the results of stock price testing were that the stock price was 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.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (7), Hold (4) and Underperform (2). The consensus is a Buy. The 12 month stock price is $2.41 CDN$ ($1.89 US$). This implies a total return of 81.18%, all from capital gains based on a current price of $1.33.
When I looked at analysts’ recommendations last year, I found 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 based on a stock price $0.54. What happened was a price move to $1.33 and a total return of 146.30% all from capital gains.
Analysts say on Stock Chase that it could be a strong performer, but they are worried about the debt level. Vineet Kulkarni on Motley Fool says the company has come a long way since its near-bankruptcy and it now cheap. Amy Legate-Wolfe on Motley Fool says the company trades below its fair value. The company reports on their fourth quarter on Globe Newswire . A Simply Wall Street on Yahoo Finance talks about the recent gain on this stock. They list one warning sign of a negative shareholders equity.
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 manufacture, and provides aftermarket support for a broad portfolio of commercial aircraft in the 50- to 100-seat categories. 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 Monday, March 14, 2022 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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