Whatever Bombardier (TSX: BBD.B) stock is doing, it’s working. Shares of the business jet aircraft maker soared higher by 10% this week after a strong investor day. Not only did earnings not disappoint, but the company also has some ambitious plans for the future.
What happened?
Bombardier stock had a strong start to the year, with earnings coming in strong. Net income came in at US$110 million for the first quarter, with a profit margin of 8.6%. Earnings per share (EPS) hit US$1.04 as well, with revenue at US$1.28 billion. Furthermore, it reported a US$14.9 billion backlog.
Yet the question is not so much how the company has performed year over year but on a quarter-over-quarter basis. This can demonstrate more about the momentum of the company. Looking back, the third quarter saw a backlog of US$14.7 billion, with revenue at US$1.86 billion and net income at a loss of US$37 million.
By the fourth quarter, net income hit US$215 million, down from the year before but up from a loss. Revenue surged higher to US$3.06 billion a well, which demonstrates that the first quarter certainly saw a drop in quarter-over-quarter revenue. The backlog also dropped to US$14.2 billion, causing a celebration when it was back up in the first quarter.
Keeping up with demand
Bombardier stock has a new logo. The company has fully come to accept its future as a business jet airliner after years of stagnant performance. The strong figures demonstrated this; however, the revenue shows there is still more work to be done.
The company went through lower-than-anticipated plan deliveries in the first quarter. Instead of the 22 expected, Bombardier stock delivered 20. However, Chief Executive Officer Eric Martel stated that it’s still on track to deliver up to 155 jets this year. With that in mind, the stock is also on track to hit its targets all the way through to 2025.
More orders
Bombardier stock also took the time during its Investor Day to announce further orders from NetJets. The order was for 12 of its Challenger 3500 jets, which was valued at US$326.4 million. Furthermore, the company should see up to 232 of these jets come the company’s way, valuing it at more than US$6 billion!
With so many new orders coming through and more of a backlog being built, the company, therefore, looks well on track for 2025 to 2030 initiatives. Between 2020 and 2023, the company has demonstrated a 13% compound annual growth rate (CAGR), according to management, on revenues. This performance should create a “clear path” towards 2025 objections of more than US$9 billion in revenue. What’s more, services revenue could create up to 50% of total revenue by 2030. This would mean less need for sales and instead allow the company to create long-term contracts.
Overall, Bombardier stock seems to have made a strong choice a couple of years back. The company is more streamlined, with a focus on business jets that align with its overall business goals. So, with that in mind and with shares up, it does seem like a strong investment on the TSX today.
