Shares of Bombardier (TSX:BBD.B) stock ended the week slightly higher as the company reported earnings that climbed past estimates. Yet the share price of Bombardier stock is still far lower than its 52-week highs. So, is Bombardier stock a buy on the TSX today?
What happened
Bombardier reported its full-year 2023 results, and investors and analysts were both impressed. The company reported US$8.1 billion in revenue, which was an increase of 16% compared to full-year 2022 levels.
Furthermore, net income climbed to US$490 million, which was a huge increase over the US$157 million loss the year before. Its profit margin climbed from a loss to 6.1%, driven by the higher revenue. Furthermore, its earnings per share hit US$4.81 from a US$1.66 loss back in 2022.
The news exceeded analyst expectations, with revenue surpassing estimates by 2.24%. Earnings per share also climbed past estimates by an incredible 9.5%. So it looks as though Bombardier stock could be flying higher for quite some time. So, why the drop?
Slower growth
The issue Bombardier stock ran into was that growth for the company came in slower than expected. Even though plane deliveries jumped and profit came back to the forefront in the last year, the company still came in lower when it came to delivery eestimates.
The problems came down to the federal government going with Boeing instead of Bombardier for its military surveillance planes. As well, supply-chain issues continue to plague the industry, and Bombardier stock is no exception.
However, the aerospace stock managed to put out 138 of its Global Challenger planes in 2023. About 40% of these came out during the last quarter alone, making it a huge rally in a tough year. Now, it expects between 150 and 155 deliveries for full-year 2024.
The supply-chain will be the focus
For investors in the future, supply-chain challenges will be the main focus. If this continues, that could really be the only reason that the company sees deliveries fall short. Because honestly, the demand is there. Bombardier stock continues to try and catch up to that demand, and there are fewer issues than last year.
The company now predicts full-year revenue of between US$8.4 and US$8.6 billion for full-year 2024. Yet while management remains optimistic, there is the fear that global demand for business jets will continue to slump over the next year. Hence the move into military surveillance.
Since the Canadian rejection, it won a United States army contract for its Global 6500 business jets. And even with this slower pace, Bombardier boasted a US$14.2 billion backlog, just slightly smaller by 4% than the year before. So despite recent results not exactly hitting all the targets, it looks like as supply-chain demands improve, the company’s share price will as well.
For now, shares of Bombardier stock were up 8% last week after the 14% fall in share price after the earnings announcement. It remains down about 26% in the last year at the time of writing.
