Bombardier Stock Is up 16% After Earnings: What Investors Need to Know

Bombardier’s continued focus on high-margin service revenue, expansion of manufacturing capabilities, and solid order book could help its stock continue soaring.

| More on:
Aircraft wing plane

Image source: Getty Images

Bombardier (TSX:BBD.B) reported its first-quarter earnings nearly two weeks ago on April 25, beating analysts’ expectations and sending its stock up over 8% in one day. Since the earnings event, Bombardier stock has gone up by around 16% to currently trade at $71.38 per share with a market cap of $7.1 billion. By comparison, the main TSX index has advanced by 2.3% during the same period. With this, the shares of Dorval-headquartered private business jet maker now trade with solid 34.1% year-to-date gains after rocketing by 343% in the previous three years.

Before we discuss what’s next for Bombardier stock, let’s take a closer look at some key highlights from its first-quarter results and what they mean for the company’s fundamental growth prospects.

Key highlights from Bombardier’s first-quarter earnings

For the quarter ended in March 2024, Bombardier posted total revenue of US$1.3 billion, down 11.8% YoY (year over year). Nonetheless, it registered a strong 13% YoY growth in its quarterly aftermarket revenue, reflecting the company’s expanding footprint in the aircraft service sector. It delivered 20 aircraft in the first quarter and remains on track to accelerate aircraft deliveries in the rest of the year, as it plans to deliver 150 to 155 aircraft in 2024.

Its adjusted quarterly EBITDA (earnings before interest, taxes, depreciation, and amortization) slipped by 3.3% YoY to US$205 million due mainly to lower revenues. On the positive side, Bombardier’s adjusted EBITDA margin improved to 16% last quarter from 14.6% a year ago. With this, the company reported adjusted quarterly earnings of US$0.36 per share, beating Street analysts expectations of US$0.28 per share.

Despite a significant use of free cash flow during the quarter, primarily due to capital builds in support of increased production, Bombardier’s financial health remained robust, with US$1.4 billion in available liquidity. As the company remains on track to speed up deliveries in the coming quarters, its financial growth trends and liquidity position should improve. These positive factors could be the main reasons why Bombardier stock has surged nearly 16% after announcing its quarterly financial results.

What’s next for Bombardier stock?

Bombardier continues to strengthen its financial position through proactive debt management. In the first quarter, the company redeemed US$100 million of debt, giving a boost to its credit profile and reducing financial risk. This strategic focus on deleveraging is very critical for sustaining long-term growth, which seems to be helping it regain investors’ confidence.

It’s also important to note that Bombardier’s backlog surged by US$700 million in the March quarter to US$14.9 billion, driven by a 60% rise in unit order intake from a year ago. This significant backlog not only provides visibility into its future revenues but also underscores the strong market demand for its aircraft.

Also, Bombardier is continuing to expand its manufacturing capabilities as it recently inaugurated a new Aircraft Assembly Centre in the Greater Toronto Area, which will also help it enhance production efficiency and boost margin. Overall, the company’s continued focus on high-margin service revenues, strategic facility expansions, and a strong order book could play a key role in accelerating its financial growth and help Bombardier stock continue soaring over 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

Financial technology concept.
Bank Stocks

How Much Will Royal Bank of Canada Pay in Dividends This Year?

Royal Bank offers safe dividends. However, it would be safer for investors to buy on a pullback.

Read more »

alcohol
Stocks for Beginners

4 Stocks That Can Help You to Get Richer in 2024

Looking for stocks that could help you get richer in 2024 and long into the future. These four stocks have…

Read more »

Overhead shot of young adults using technology at a table
Tech Stocks

Missed Out on Nvidia Stock? Buy Celestica Stock Instead

Nvidia stock (NASDAQ:NVDA) has certainly been the heavy hitter of 2023 and 2024, but this stock has grown even more…

Read more »

railroad
Dividend Stocks

Bull Market Buys: 1 Magnificent Stock to Own for the Long Run

This one cyclical stock could be the best long-term option for investors, especially while shares still offer a steal of…

Read more »

healthcare pharma
Stocks for Beginners

These 2 Healthcare Stocks Are Set to Soar in 2024 and Beyond 

Are you looking for innovation and growth? These two healthcare stocks offer exposure to the growing tech of the healthcare…

Read more »

Business success with growing, rising charts and businessman in background
Stocks for Beginners

3 Top Growth Stocks That Could Run Circles Around the Market in 2024

These three growth stocks all have one very important thing in common, which should help drive further growth throughout 2024.

Read more »

Upwards momentum
Stocks for Beginners

Check Out This Soaring Stock up 556% in 3 Years — With More Gains Likely to Come

Despite rallying by more than 500% in the last three years, this top Canadian stock still has room to surge…

Read more »

Electric car being charged
Stocks for Beginners

Top 2 Canadian EV Stocks to Power Your Portfolio in 2024

Here are two of the best Canadian EV stocks you can consider investing in for the long term to expect…

Read more »