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Is Bombardier Stock a Good Investment Opportunity?

Published 2024-02-13, 12:38 a/m
© Reuters.  Is Bombardier Stock a Good Investment Opportunity?

Kalkine Media - Bombardier (TSX:BBDb) (TSX:BBD.B) stock saw a modest uptick at the end of the week following the release of its earnings report, which outpaced estimates. However, despite the positive news, the stock still lags significantly behind its 52-week highs. This raises the question: Is Bombardier stock a worthwhile investment on the TSX right now?

The company's full-year 2023 results portrayed a positive outlook, as revenue surged to US$8.1 billion, reflecting a remarkable 16% increase compared to the previous year. Furthermore, net income experienced a substantial upturn to US$490 million, representing a significant turnaround from the US$157 million loss reported in 2022. With a profit margin of 6.1% and earnings per share reaching US$4.81, Bombardier surpassed analyst expectations by a considerable margin. TSX industrial stocks, including Bombardier, garnered notable attention amid these impressive financial results.

However, despite the impressive financial performance, the stock faced headwinds due to slower-than-anticipated growth. The company fell short of delivery estimates, partly due to losing out on a military surveillance plane contract to Boeing (NYSE:BA) and ongoing supply chain disruptions affecting the aerospace industry.

Nevertheless, Bombardier managed to deliver 138 Global Challenger planes in 2023, with a significant portion completed in the last quarter alone. Looking ahead to 2024, the company aims for between 150 and 155 deliveries, although supply chain challenges remain a concern.

Management remains optimistic about future revenue, forecasting between US$8.4 billion and US$8.6 billion for the full year 2024. Despite potential challenges in the business jet market, evidenced by the move into military surveillance, Bombardier secured a US Army contract for its Global 6500 business jets following its Canadian rejection.

While recent results may have fallen short of expectations, Bombardier maintains a robust backlog of US$14.2 billion, hinting at future growth opportunities. Although the stock saw a brief rally after the earnings report, it remains down approximately 26% over the past year, indicating potential value for investors willing to navigate supply chain uncertainties.

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