Bombardier Inc. Is Gearing Up for a Strong 2015

Bombardier Inc. (TSX:BBD.B) reported a third-quarter profit that surpassed what analysts had been expecting for the company. This was a direct result of the 58% increase in the number of airplanes that were delivered followed by significant cost-cutting.

Analysts had predicted that the company would see $4.82 billion in revenue, but Bombardier beat this with revenue at $4.91 billion. Further, earnings rose 35% to $222 million from the previous year. Analysts had expected only 10 cents a share in earnings, but the $222 million resulted in 12 cents a share.

The company has also let go of a total of 3,700 jobs in the aerospace business since the year started. Furthermore, 900 are being cut in its train division. And while this is going to be great for the company long term, resulting in annual savings of $268 million across both divisions, it carried significant restructuring charges, which is why the stock is down today. After those charges, net income dropped to $74 million.

But now the company is in a really good position and I believe that it will gear it up for a strong 2015, something many investors have been itching to hear.

For the rail division, there is currently an order backlog of $34.5 billion, which is up a little over $2 billion year over year. This profitable division has been giving Bombardier the cash flow it needs to be able to focus on its other lucrative opportunities: the CSeries.

On the earnings call, CEO Pierre Beaudoin said that the flight test program for the CSeries had resumed in September. It had been forced to stop these test flights for a while, which cut into the buffer that many aerospace companies put in when developing new products. Now that it is testing the plane again, investors are hoping that it all goes down without a problem.

So far, Bombardier has 243 orders for the CSeries. It hopes that it will be able to increase that number to 300 by the end of the year. One part that could help is the fact that these companies have the option to buy 162 more planes.

If Bombardier can get the plane out on time and start delivering, it will start bringing in considerable amounts of revenue and income. Even during these tough times, the company has paid a dividend of 2.69%. I anticipate it to be raised when its planes start getting delivered.

So I say buy Bombardier on the belief that it will rise. It’s going to be a long-term hold, but I don’t see much more downside for the company.

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Fool contributor Jacob Donnelly has no position in any stocks mentioned.

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