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.

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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.

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