These are uncertain times for global trade. What once seemed like a well-planned roadmap for growth is now facing uncertainty from Trump tariff wars. At times like these, you might wonder if it is worth buying shares of business jet maker Bombardier (TSX:BBD.B) for its growth potential. After all, the company deferred its 2025 guidance and business objectives in light of the rapidly evolving schedule for tariff implementation.
Tariffs and Bombardier
You have been reading a lot about the back-and-forth of tariff implementation, negotiation, and retaliation. These trade protectionist measures are beyond the control of any individual business. The business has to take the situation as it comes and find a way to circumvent the impact. This could mean hitting a pause button on growth plans till the heated talks cool, finding an alternate route, or entirely letting go of the opportunity.
Bombardier is currently assessing the path, the risk, and the cost involved. Canada has ordered 88 Lockheed Martin F-35 fighter jets worth $19 billion, and the United States Air Force has ordered eight Bombardier jets worth about US$465 million.
Bombardier has production facilities in the United States, but it procures raw materials, components, items, and systems from suppliers worldwide. According to a Reuters article, Bombardier chief executive officer Eric Martel said that the company’s costs are not much affected by U.S. tariffs on aluminum and steel and Canada’s retaliatory tariffs on metals and adhesives. But he is worried about the possibility of order cancellation.
Should you buy Bombardier stock amidst tariff uncertainty?
It is unclear if Bombardier’s planes would be exempted from the tariffs as the company complies with the United States-Mexico-Canada Agreement (USMCA). And even if tariffs are implemented, they are unlikely to last long.
In such a scenario, Bombardier can circumvent the U.S. tariff situation by prioritizing the delivery of planes to its non-U.S. clients. It could execute deliveries to the U.S. client when the tariff situation eases.
The quantitative impact of this will be reflected in 2025 numbers, but it is unlikely to deter Bombardier’s long-term growth roadmap. For the near-term weakness, Bombardier is already prepared with no debt maturity till 2026 and available liquidity of YS$2.08 billion.
If we remove the US$465 million order from Bombardier’s 2025 revenue, it could post flat revenue growth. However, new orders from other countries and accelerated deliveries to other clients could mitigate the impact of U.S. uncertainty.
Bombardier stock could generate growth if you can stay invested for at least three years or more.
Why am I bullish on the business jet maker?
Remember, tariffs have not changed the world for the business jet maker. Bombardier has learned from its past mistakes of a failed product and heavy reliance on one market. It has resilient product quality and a diversified client base that reduces concentration risk.
Moreover, its aftermarket service brings in a steady flow of cash. And debt is no longer a concern that could pull down Bombardier like it did before the pandemic. Eric Martel pulled the company out of near bankruptcy and made it a profitable venture. His proven track record of handling crises gives investors confidence that their money will be used optimally in difficult times.
How to invest in Bombardier stock?
Bombardier stock has corrected 20% since December 2024 and is trading at 9.1 times its forward earnings per share (EPS). The stock could fall further as the market reacts to the developments around tariffs because of Bombardier’s exposure to tariffs.
You can accumulate shares of Bombardier at every dip and reduce your average cost per share. Once the tariff war cools down and things return to normalcy, Bombardier’s revenue could surge on pending deliveries, and the stock could compensate for the short-term weakness.
