Bombardier (TSX: BBD.B) stock has had a pretty crazy few years. The company fell to below a dollar per share, losing its place on the TSX today. Then, the business jet provider surged forward after a reverse stock split and a selling of non-jet-related assets.
Yet after going through a huge overhaul, the pandemic, and more, what’s been happening for Bombardier stock these days? And is it a buy, sell, or hold?
Earnings come in
During the most recent earnings report, Bombardier stock reported that revenue gained an impressive 28% year over year. This came as the company stated it would be able to meet its business jet delivery target for the year, even though supply-chain pressures remain high and there are fewer people taking private jets.
Yet the increase came thanks to plane deliveries coming in as well as other methods of revenue. This includes services such as maintenance and parts sales, repairs, and other forms that boosted the share price.
Bombardier stock managed to deliver 31 business jets during the quarter — six more aircraft compared to 2022 levels. This brought the total to 82 so far in 2023. Yet even so, it means the company will need to deliver 56 more if it hopes to reach the 138 planes promised by the end of 2023.
Can they keep up?
Supply-chain issues have remained for Bombardier stock, yet management seemed to believe everything would be in place to reach that 56 aircraft goal. Even so, there could be some issues in the future.
This would happen as private plane use seems to have plateaued from the pandemic highs of 2021. Though it still remains higher than 2019 levels, the slower pace caused the backlog to fall by US$100 million to US$14.7 billion from the year before.
The issue now is that Bombardier stock cannot continue to create jet planes if no one is buying them. These delivery targets will eventually need to slow down, and the question will then be how Bombardier stock will keep up demand for stock performance long term.
Analysts weigh in
Analysts had similar questions as well. Orders are declining, though business jet conditions do remain relatively healthy. Even so, the other methods of revenue have been climbing as well. This segment generated US$414 million in the quarter, which came in at a fifth of total revenue and an 11% increase year over year.
Furthermore, management noted that there are about 5,000 aircraft currently in the air that are rapidly aging. The Globals and Challengers are nearing midlife inspections or even 10-year inspections. This could mean a lot of maintenance and even replacement.
Overall, however, Bombardier stock has appeared quite strong as of late. Revenue rose to US$1.86 billion in the quarter, a large increase from the US$1.46 billion the year before. The adjusted net income also rose to US$80 million, up from a loss of US$2 million last year. This beat estimates by almost double!
Bombardier stock now states it’s on track to achieve its full-year forecast of US$7.6 billion. But the question will be, for how long? So, if you’re in for the short term, Bombardier stock could be a good buy. But what about the long term? That remains up in the air.
