Is it a good company at a reasonable price? The big negative for me is the negative book value. Personally, I would not buy a stock with a negative book value. I do not like the fact that a number of stock price testing cannot be done. The debt ratios are also not good. I would suggest that any purchase is highly speculative. Personally, I am not interested in this company at the present time.
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.
When I was updating my spreadsheet, I noticed that this company still has a negative book value. This company is reporting in US$.
If you had invested in this company in December 2013, for $1,037.25 you would have bought 9 shares at $19.88 per share. In December 2023, after 10 years you would have received $23.21 in dividends. The stock would be worth $478.89. Your total return would have been $502.10. This would be a total loss of 7.21% per year with 7.44% from capital loss and 0.23% from dividends. This calculation takes into consideration stock consolidation, which means that the original cost is showing as higher because of this consolidation.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $115.25 | $1,037.25 | 9 | 10 | $23.21 | $478.89 | $502.10 |
This stock currently does not current pay dividends, but it has in the past and may do so again. However, analysts seem to feel that it could restart dividends this year. The last year that this stock paid a dividend was 2014
Debt Ratios are awful as it has a lot of debt and a negative book value. The Long Term Debt/Market Cap Ratio for 2023 is too high at 1.46 and currently at 1.49. This ratio should be under 1.00 and best at 0.50 or lower. The Liquidity Ratio for 2023 is too low at 1.00. If you added in Cash Flow after dividends, the ratios are still too low at 1.10 and currently at 1.12. I prefer this to be at 1.50 or higher. The Debt Ratio for 2023 is of course too low at 0.84 as the company has a negative book value. The Leverage and Debt/Equity Ratios for 2023 cannot be calculated because of a negative book value.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 1.46 | 1.49 |
| Intang/GW | 0.02 | 0.02 |
| Liquidity | 1.00 | 1.00 |
| Liq. + CF | 1.10 | 1.12 |
| Debt Ratio | 0.84 | 0.84 |
| Leverage | -5.18 | -5.18 |
| D/E Ratio | -6.18 | -6.18 |
The Total Return per year is shown below for years of 5 to 37 to the end of 2023 in CDN$. 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. |
|---|---|---|---|---|---|
| 2018 | 5 | 0.00% | 0.95% | 0.95% | 0.00% |
| 2013 | 10 | 0.00% | -7.21% | -7.44% | 0.23% |
| 2008 | 15 | 0.00% | -2.55% | -3.79% | 1.24% |
| 2003 | 20 | 0.00% | -4.23% | -5.04% | 0.81% |
| 1998 | 25 | 0.00% | -5.60% | -6.44% | 0.84% |
| 1993 | 30 | 0.00% | 1.75% | -0.72% | 2.47% |
| 1988 | 35 | 0.00% | 7.44% | 2.69% | 4.74% |
| 1987 | 37 | 0.00% | 9.96% | 3.94% | 6.02% |
The Total Return per year is shown below for years of 5 to 34 to the end of 2023 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. |
|---|---|---|---|---|---|
| 2018 | 5 | 0.00% | 1.40% | 1.40% | 0.00% |
| 2013 | 10 | 0.00% | -9.45% | -9.66% | 0.21% |
| 2008 | 15 | 0.00% | -2.84% | -4.34% | 1.50% |
| 2003 | 20 | 0.00% | -4.12% | -5.14% | 1.02% |
| 1998 | 25 | 0.00% | -5.00% | -6.02% | 1.03% |
| 1993 | 30 | 0.00% | 1.77% | -0.77% | 2.54% |
| 1890 | 34 | 0.00% | 6.18% | 1.99% | 4.19% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are all negative, so I can do not test using them. The 10 year ratios are also all negative, and so cannot be used. The historical ratios are 9.39, 12.39 and 15.30. The current P/E Ratio is 9.47 based on a stock price of $52.72 and EPS estimate for 2024 of $5.57 (4.13 US$). This ratio is between the low and median ratios of the historical median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I also have Adjusted Earnings per Share (AEPS) Data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 5.08, 7.96 and 9.78. The current P/AEPS 9.44 based on a stock price of $39.08 and AEPS estimate for 2024 of $4.14. This ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$ and you will get a similar result in CDN$.
I cannot do any Graham Price testing because of the negative book value. I cannot do any Price/Book Value per Share Ratio testing because of the negative book value. I cannot do any dividend yield testing because this company, at the current time, is not paying dividends.
I get a 10-year median Price/Cash Flow per Share Ratio of 7.18. The current P/CF Ratio is 5.32 based on a stock price of $39.08, Cash Flow per Share estimate for 2024 of $7.35 and a Cash Flow of $718M. The current ratio is 26% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ and you will get a similar result in CDN$.
The 10-year median Price/Sales (Revenue) Ratio is 0.30. The current P/S Ratio is 0.45 based on Revenue estimate for 2024 of $8,506M, Revenue per Share of $87.10 and a stock price of $39.08. The current ratio is 50% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$ and you will get a similar result in CDN$.
Results of stock price testing is that the stock price is probably expensive. I am going with the P/S Ratio test here. This is the only one that says that the stock price is expensive. Other tests go from cheap to reasonable and above the median. One problem is that a number of tests cannot be done as the Book Value is negative.
When I look at analysts’ recommendations, I find Strong Buy (4), Buy (7), Hold (3), Underperform (2) and Sell (1). There is not much consensus here. The consensus based on Analysts’ Consensus score in a Buy. The 12 month stock price consensus is $77.94 ($57.86 US$) with a high of $100.01 ($74.24 US$) and low of $41.03 ($30.46 US$). The consensus stock price of $77.94 implies a total return of 47.84% with 47.84% from capital gains and 0% from dividends.
There are only entries on Stock Chase from 2023 and there are 4 Do Not Buy recommendations. However, the last recommendation was a Buy. Stock Chase gives this stock 3 stars out of 5. Christopher Liew on Motley Fool thinks this stock could rebound in 2024. Amy Legate-Wolfe on Motley Fool thinks this company has an uncertain future. The company put out a Press Release on their year-end results for 2023.
Simply Wall Street via Yahoo Finance looks at this stock. Simply Wall Street gives this stock 2 and one half stars. They have 4 warnings of negative shareholder’s equity; interest payments are not well covered by earnings; significant insider selling over the past 3 months; and shareholders have been diluted in the past year.
Bombardier designs, manufactures, markets, and provides parts and maintenance for its large, long-range Global and medium-to-large Challenger aircraft families of business jets. Most of the company's revenue is generated in North America, with operations in Europe, North America, Asia-Pacific, and other markets. Its web site is here Bombardier Inc.
The last stock I wrote about was about was be Emera Inc (TSX-EMA, OTC-EMRA) ... learn more. The next stock I will write about will be RioCan Real Estate (TSX-REI.UN, OTC-RIOCF) ... learn more on Wednesday, March 13, 2024 around 5 pm. Tomorrow on my other blog I will write about TFSA Calculator .... learn more on Tuesday, March 12, 2024 around 5 pm.
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