Bombardier Stock: Here’s What’s Coming in 2023

Here are some key factors you must know before buying Bombardier stock in 2023.

| More on:
Plane on runway, aircraft

Image source: Getty Images.

Bombardier (TSX:BBD.B) continues to soar in January 2023 after delivering outstanding 336% positive returns to investors in the last two years. Shares of the Canadian business jet maker are currently trading at $62.29 per share with 19.2% month-to-date gains, taking its market cap to above $6 billion. By comparison, the TSX Composite has inched up by 5.5% this year.

But can Bombardier stock continue to surge, despite the ongoing macroeconomic uncertainties? Before I discuss that, let me quickly highlight some key reasons for its spectacular rally in the last couple of years.

Bombardier’s improving fundamental outlook

Bombardier’s consistently improving financial position and its fundamental outlook could be the main reasons for sharp gains in its share prices in the last two years. Its business transformation started in 2015 when the Canadian firm laid out a five-year turnaround plan with performance-oriented goals to improve its cash generation and cut unnecessary costs.

In the next few years, Bombardier planned and executed its exit from all other businesses, like the manufacturing of trains, commercial jets, et cetera, to increase its focus on business jet manufacturing. With the help of these steps, the company managed to reposition itself as a pure-play business aviation firm in 2020, despite the global pandemic-driven operational challenges.

In 2021, Bombardier gave a major update to its Challenger 350 platform to launch the Challenger 3500 aircraft, which it claimed to be “the most sustainably designed business jet in its class.” Its years of strategic planning, repositioning, and new growth-oriented initiatives finally helped the company regain investors’ confidence and triggered a sharp rally in Bombardier stock that year.

The Canadian business jet company, just like most other businesses, faced macroeconomic challenges like high inflationary pressures and high labour costs in 2022. Nonetheless, its continued focus on reducing debt and improving profitability and free cash flow helped its stock soar last year, despite the broader market weakness.

What to expect from Bombardier stock in 2023

Bombardier is continuing to give its investors more reasons to cheer in 2023. On January 17, the Canadian business aviation firm released its preliminary full-year 2022 financial results ahead of its final results scheduled to be released on February 9. The company now expects its full-year revenue to be around $6.9 billion and its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) to be close to $930 million with the help of 123 aircraft deliveries during the year. These financial figures are better than its updated 2022 guidance of more than $6.5 billion in revenue, over $825 million in adjusted EBITDA with more than 120 aircraft deliveries.

In the last few quarters, Bombardier’s backlog continued to increase with strong order activity, which clearly reflected strong demand for its business aircraft. Notably, its backlog increased to $15 billion at the end of the September 2022 quarter, reflecting a sequential increase of $300 million.

While consistent inflationary pressures and the possibility of a moderate recession in the short term could keep Bombardier stock volatile in 2023, it might not significantly affect its long-term growth outlook. Given its consistently growing backlog, ability to increase production further, and consistently improving financial performance and balance sheet, I find Bombardier a very attractive Canadian stock to buy in 2023 to hold for the long term.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

More on Stocks for Beginners

eat food
Stocks for Beginners

Hungry? These 3 Food Stocks Are Hard to Ignore

Food stocks are some of the best long-term investments on the market. Here are three options that are hard to…

Read more »

A worker uses a laptop inside a restaurant.
Stocks for Beginners

Stubborn Interest Rates: 2 TSX Stocks That Can Play Along (and Even Win)

Higher interest rates are actually good for these stocks. They trade at good valuations and provide nice dividends.

Read more »

Tired or stressed businessman sitting on the walkway in panic digital stock market financial background
Stocks for Beginners

Buying These 2 Stocks Is a Good Way to Hedge Against a Falling Market

Investors looking to hedge against a stock downturn should consider these two stocks as viable long-term picks.

Read more »

Dollar symbol and Canadian flag on keyboard
Stocks for Beginners

2 Canadian Stocks I’ll Be Buying Hand Over Fist in 2023

There are some great Canadian stocks on sale right now. Here's a duo of companies I'm buying that you may…

Read more »

Women's fashion boutique Aritzia is a top stock to buy in September 2022.
Stocks for Beginners

Has ATZ Stock Bottomed Out?

Has ATZ stock finally bottomed out after losing nearly 10% of its value in 2022? Let’s find out.

Read more »

Stocks for Beginners

4 Top Value Stocks to Buy in February 2023

Not only are all these value stocks worth considering, each is growing significantly on the TSX today!

Read more »

Couple relaxing on a beach in front of a sunset
Stocks for Beginners

3 Stocks That Could Help You Retire a Millionaire

Looking for some stocks that can help you retire rich? Here are three buy-and-forget options that will do the trick.

Read more »

Target. Stand out from the crowd
Stocks for Beginners

3 Must-Buy TSX Stocks for Anyone New to Investing

Are you new to investing? These three TSX stocks for income, value, and growth are must-buys for any Canadian investor…

Read more »