As of this writing, shares of Bombardier (TSX: BBD.B) stock are up by 5.15% year to date, having reported its earnings for fiscal 2023 earlier in February. The stock missed its earnings for the year, going well past them instead of falling short.
Despite the resulting uptick in share prices, Bombardier stock trades at a 17.7% discount from its all-time high. Is the stock a good buy today, or would it be better to watch it from the sidelines right now?
Bombardier stock
Bombardier is a Canadian business jet manufacturer headquartered in Montreal and a major player in the Canadian aerospace industry. The global leader in aviation focuses on designing, manufacturing, and servicing exceptional business jets, boasting a fleet of around 5,000 aircraft in service. The stock reported its full-year 2023 results, impressing analysts and investors alike.
The company saw its revenue jump by 16% from its fiscal 2022 revenue, hitting the US$8.1 billion mark. Additionally, its net income increased from a US$157 loss in 2022 to a profit of US$490 million. The company’s profit margin finally hit 6.1%, reflected by an earnings per share of US$4.81 compared to a US$1.66 loss in the previous year.
Typically, companies missing analyst expectations is bad because most companies rarely exceed them. Bombardier stock surpasses analyst expectations about its revenue by 2.24%, beating earnings per share estimates by over 9%.
What could have been
While the company beat its earnings estimates by a significant margin, Bombardier stock might have seen an even better year. The Canadian government did not reward Bombardier with the contract for its military planes.
Instead, the federal government gave the contract to Boeing. Combined with global supply chain issues, these factors have hindered what could have been an even stronger earnings result for fiscal 2023.
Supply chain challenges have plagued the world due to various geopolitical factors coming into play. If these issues continue to persist in 2024, they might be the only reason the company might fall short of meeting deliveries.
Despite a slowdown in discretionary spending otherwise, there is undoubtedly a solid demand for the jets Bombardier makes. The company is simply trying to meet the demand, trying to ensure fewer issues due to supply chain problems.
For fiscal 2024, Bombardier stock has set a full-year revenue guidance of US$8.4 billion to US$8.6 billion. While the demand for business jets might decline in the coming year, Bombardier’s shift to military surveillance jets might become the tailwind it needs to meet its guidance.
Foolish takeaway
While losing the Canadian federal government contract to Boeing was a hit for Bombardier stock, it is still making progress in the military surveillance aircraft space. Bombardier stock secured a U.S. Army contract for its Global 6500 business jets.
Additionally, the aerospace giant has a US$14.2 billion backlog that paints a better picture of its financials in 2024. It might be a good time to invest in its shares as they hover close to their 52-week high.
