Is it a good company at a reasonable price? Results of stock price testing is that the stock price is unknown, but could be reasonable if some analysts are to be believed on the estimates. This is a high risk situation. Personally, I would not buy this stock. If I were to buy such a risky stock, I would prefer a startup rather than a company that may not may not be turning around after having problems for the past 20 years and may or may not be interesting again.
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% total return per year with 5.69% from capital gains and 5.39% from dividends.
When I was updating my spreadsheet, I noticed there has been no growth except for Cash Flow over the past 5 and 10 years. Because this company is reporting in US$ and the growth below is in US$.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth | -134.60% | -15.68% |
| 5 | AEPS Growth | -35.14% | -5.84% |
| 5 | Net Income Growth | 0.00% | 0.00% |
| 5 | Cash Flow Growth | 101.88% | 15.09% |
| 5 | Dividend Growth | 0.00% | 0.00% |
| 5 | Stock Price Growth | -55.44% | -11.32% |
| 10 | Revenue Growth | -142.56% | -8.48% |
| 10 | AEPS Growth | -981.08% | -21.18% |
| 10 | Net Income Growth | 0.00% | 0.00% |
| 10 | Cash Flow Growth | -25.75% | -2.26% |
| 10 | Dividend Growth | 0.00% | 0.00% |
| 10 | Stock Price Growth | -146.76% | -12.01% |
If you had invested in this company in December 2012, for $1,034.00 you would have bought 11 shares at $94.00 per share. (This price is adjusted for recent consolidation with the actual price per share being $3.76.) In December 2022, after 10 years you would have received $55.91 in dividends. The stock would be worth $574.97. Your total return would have been $630.88.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $94.00 | $1,034.00 | 11 | 10 | $55.91 | $574.97 | $630.88 |
I held this stock from 1987 to 2017 and made 11.08% per year with 5.69% from capital gains and 5.39 from dividends. I made money because I bought this stock relatively low. My Adjusted Cash Basis (ACB) (due to splits) was just $0.60. I sold at $3.08 in 2017 because I was worried it might just fall below my ACB.
This stock is currently not paying any dividends. It has paid dividends for two different periods in the past 36 years. So, I do not have any dividend yield data, nor Dividend Payout Ratios.
Debt Ratios are awful. The Long Term Debt/Market Cap Ratio for 2022 is 1.65. The best that can be said is that it is better than last year’s 2.24 and the year before of 8.91. This ratio, if above 1, says that the market cap is smaller than the debt. So, investors are valuing this company lower than the company’s debt. This ratio is, of course, too high.
The Liquidity Ratio for 2022 is low at 1.03. If you add in cash flow it is still low at 1.22. I prefer this to be at 1.50 or higher. The Debt Ratio is very low at 0.82. This means that assets do not cover liabilities. The Leverage and Debt/Equity Ratios cannot be calculated because of a negative Book Value.
The Total Return per year is shown below for years of 5 to 36 to the end of 2022 in CDN$. 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. |
|---|---|---|---|---|---|
| 2017 | 5 | 0.00% | -7.15% | -7.15% | 0.00% |
| 2012 | 10 | 0.00% | -5.13% | -5.70% | 0.57% |
| 2008 | 15 | 0.00% | -4.47% | -5.58% | 1.11% |
| 2003 | 20 | 0.00% | -3.34% | -4.38% | 1.04% |
| 1998 | 25 | 0.00% | -3.46% | -4.73% | 1.27% |
| 1993 | 30 | 0.00% | 5.07% | 1.23% | 3.84% |
| 1988 | 35 | 0.00% | 10.13% | 3.94% | 6.18% |
| 1989 | 36 | 0.00% | 10.03% | 4.00% | 6.03% |
The Total Return per year is shown below for years of 5 to 33 to the end of 2022 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. |
|---|---|---|---|---|---|
| 2017 | 5 | 0.00% | -8.44% | -8.44% | 0.00% |
| 2012 | 10 | 0.00% | -8.12% | -8.64% | 0.51% |
| 2008 | 15 | 0.00% | -6.34% | -7.46% | 1.13% |
| 2003 | 20 | 0.00% | -2.42% | -3.82% | 1.40% |
| 1998 | 25 | 0.00% | -3.02% | -4.49% | 1.47% |
| 1993 | 30 | 0.00% | 4.75% | 1.01% | 3.73% |
| 1989 | 33 | 0.00% | 6.24% | 1.99% | 4.25% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are negative and unusable. The corresponding 10 year ratios are also negative and unusable. The corresponding historical ratios 9.84, 13.16 and 15.76. These are reasonable ratios. The current P/E Ratio is 24.46 based on a stock price of $66.08 and EPS estimate for 2023 of $2.70 ($1.96 US$). The current ratio is above the high of the historical median ratios. This stock price testing suggests that the stock price is relatively expensive. This testing is in CDN$.
The EPS estimate for 2024 is higher at $5.33 ($3.87 US$). With a stock price of $66.08 the ratio is 12.39. This ratio is between the low and median ratios of the historical year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in CDN$.
I have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are negative and unusable. The corresponding 10 year ratios are 5.08, 9.85 and 11.28. The current P/AEPS Ratio is 26.65 based on AEPS estimate for 2023 of $1.79 and a stock price of $47.70. The current ratio is above the high ratio of the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar result in CDN$.
Here also, you have a much higher expected AEPS for 2024 of $3.87. With a stock price of $47.70, the ratio is 13.21. However, this ratio is still above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar result in CDN$.
I cannot do a Price/Graham Price test because of the Negative book Values. I cannot do any Price/Book Value per Share testing because of the negative book values. There are no current dividends, so I cannot do any dividend yield testing.
I get a 10-year median Price/Cash Flow per Share Ratio of 6.79. The current ratio is 7.52 based on Cash Flow per Share estimate for 2023 of $6.34, Cash Flow of $597M and a stock price of $47.70. The current ratio is 11% below the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$. You will get a similar result in CDN$.
Analysts also expect a high Cash Flow per Share in 2023 of $10.60. With a stock price of $47.70 this implies a ratio of 4.50 and Cash Flow of $997M. This ratio is 34% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$. You will get a similar result in CDN$.
The 10-year median Price/Sales (Revenue) Ratio is 0.30. The current ratio is 0.58 based on a Revenue estimate for 2023 of $7,747M, Revenue per Share of $82.33 and a stock price of $47.70. The current ratio is 93% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar result in CDN$. Unfortunately, this ratio does not change munch over the next two years being 0.56 in 2024 and 0.54 in 2025.
Results of stock price testing is that the stock price is unknown. If you believe the analysts, they expect this company to do much better in the future and therefore the price might be reasonable. This comes from the P/E Ratio testing and P/CF Ratio testing.
When I look at analysts’ recommendations, I find Strong Buy (4), Buy (6), Hold (3) and Underperform (2). The consensus is a Buy. The 12 month stock price consensus is $77.94 ($56.54 US$). The implies a total return of 17.95% all from capital gains.
Some analysts on Stock Chase like this company and some do not. Stock Chase gives this stock 3 stars out of 5. Christopher Liew on Motley Fool says this is one of three companies that are moving ahead of the recovering market. Motley Fool says this company is a defensive stock with long-term potential. The company put out a Press Release on their 2022 results. Simply Wall Street on Yahoo Finance discusses year end results for this company. Simply Wall Street has 2 warnings for this stock of negative shareholders’ equity and significant insider selling over the past 3 months. Simply Wall Street gives this stock 3 stars out of 5.
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. The company mainly operates in Europe, North America, Asia-Pacific, and others. Most of the revenue is generated from North America. 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 13, 2023 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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