Is it a good company at a reasonable price? First of all, I would not personally buy a stock with a negative book value. I have bought ones with no dividends, but never with a negative book value. There are obviously big differences in how people look at this company. I am surprised that Simply Wall Street does not have a warning about the negative book value and the debt ratios. The consensus is still a Buy, but there are wide differences in analysts’ recommendations. My testing is pointing to a relatively expensive stock price.
I do not own this stock of Bombardier Inc (TSX-BBD.B, OTC-BDRBF). The buying of this stock was part of my early foray into industrial stocks in 1987. Up until 2001, I was making some 35% return per annum on this stock. When the stock first dropped in 2002, I had still made some 28% return per annum on this stock. Even by the lowest point in 2005, I had made some 13% per annum on this stock. By that time, it seemed to be turning itself around, so I did not sell. I lost hope by 2017, so I sold. I made 11.08% per year.
When I was updating my spreadsheet, I noticed this company still has a negative Book Value. Personally, I would not buy any company that has a negative book value.
If you had invested in this company in December 2014, for $1,037.50 you would have bought 10 shares at $103.75 per share. In December 2024, after 10 years you would have received $0 in dividends. The stock would be worth $977.50. Your total return would have been $977.50. This would be a total loss of 0.59% per year with 0.59% from capital loss and 0% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $103.75 | $1,037.50 | 10 | 10 | $0.00 | $977.50 | $977.50 |
This stock currently has no dividends, so I cannot talk about dividends, dividend growth or dividend payout ratios. Over the past 38 years, this company paid dividends in 25 of those years.
Debt Ratios are bad with a negative book value. The Long Term Debt/Market Cap Ratio for 2024 is fine at 0.77 and but too high currently at 0.91. The Liquidity Ratio for 2024 is too low at 1.10 and 1.10 currently. If you added in Cash Flow after dividends, the ratios are still too low at 1.17 and currently at 1.29. The Debt Ratio for 2024 is far too low at 0.86 and 0.86 currently. The Leverage and Debt/Equity Ratios for 2024 are can not be calculated because of a negative book value.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.77 | 0.91 |
| Intang/GW | 0.01 | 0.01 |
| Liquidity | 1.10 | 1.10 |
| Liq. + CF | 1.17 | 1.29 |
| Debt Ratio | 0.86 | 0.86 |
| Leverage | -6.36 | -6.36 |
| D/E Ratio | -7.36 | -7.36 |
The Total Return per year is shown below for years of 5 to 38 to the end of 2024 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2019 | 5 | 0.00% | 15.17% | 15.17% | 0.00% |
| 2014 | 10 | 0.00% | -0.59% | -0.59% | 0.00% |
| 2009 | 15 | 0.00% | -0.96% | -1.68% | 0.71% |
| 2004 | 20 | 0.00% | 3.16% | 2.02% | 1.14% |
| 1999 | 25 | 0.00% | -4.64% | -5.15% | 0.51% |
| 1994 | 30 | 0.00% | 2.97% | 1.07% | 1.90% |
| 1989 | 35 | 0.00% | 7.78% | 4.11% | 3.67% |
| 1987 | 38 | 0.00% | 10.47% | 5.51% | 4.97% |
The Total Return per year is shown below for years of 5 to 35 to the end of 2024 in US$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2019 | 5 | 0.00% | 13.10% | 13.10% | 0.00% |
| 2014 | 10 | 0.00% | -2.74% | -2.74% | 0.00% |
| 2009 | 15 | 0.00% | -2.88% | -3.63% | 0.76% |
| 2004 | 20 | 0.00% | 2.68% | 1.27% | 1.41% |
| 1999 | 25 | 0.00% | -4.49% | -5.12% | 0.62% |
| 1994 | 30 | 0.00% | 3.07% | 1.00% | 2.07% |
| 1890 | 35 | 0.00% | 6.97% | 3.54% | 3.43% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 0.18, 0.52 and 0.86. The corresponding 10 year ratios are all negative and so useless. The corresponding historical ratios are 9.31, 13.16 and 15.76. These are more reasonable values. The current ratio is 8.79 based on a stock price of $83.65 and EPS estimate for 2025 of $9.51 ($6.59 US$). This ratio is quite low and below the low ratio of the historical median ratios. This stock price testing suggests that the stock price is relatively cheap.
I also have Adjusted Earnings per Share (AEPS). The 5-year low, median, and high median Price/Earnings per Share Ratios are 6.49, 10.90, 13.68. The corresponding 10 year ratios 6.25, 11.04 and 14.77. The current P/AEPS Ratio is 9.10 based on a stock price of $57.60 and AEPS estimate for 2025 of $6.33. The current ratio is between the low and median ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$, but you will get a similar result in CDN$.
I cannot do any Graham Price testing as the Book Value is negative and has been negative for some years.
I cannot do any Price/Book Value per Share Ratio testing because of negative Book Values.
I get a 10-year median Price/Cash Flow per Share Ratio of 7.54. The current P/CF Ratio is 5.46 based on a stock price of $57.60 and Cash Flow per Share estimate for 2025 of $10.55 and Cash Flow of $1,055. The current ratio 28% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$, but you will get a similar result in CDN$. However, Cash Flow per Share estimate is up 161% over that for last year, so I do wonder. Analysts expect the Cash Flow per Share to be even higher next year. The Cash Flow per Share was at this level in 2022. I still wonder about this test.
There currently are no dividends, so there is no dividend yield testing.
The 10-year median Price/Sales (Revenue) Ratio is 0.33. The current ratio is 0.63 based on Revenue estimate for 2025 of $9,174M, Revenue per Share of $91.72 and a stock price of $57.60. The current ratio is 89% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$, but you will get a similar result in CDN$.
Results of stock price testing is that the stock price is probably relatively expensive as the P/S Ratio test is showing. I like this test better than the P/E Ratio and P/AEPS Ratio tests. These tests are showing the stock as either cheap or reasonable. There are a couple of tests that I like but I could not do. The reason being the negative book Value.
When I look at analysts’ recommendations, I find Strong Buy (5), Buy (6), Hold (4), and Underperform (1). The consensus would be a Buy. The 12 month consensus stock price is $111.46 ($77.20 US$) with a high of $143.18 ($99.17 US$) and low of $69.98 ($48.47 US$). The consensus stock price of $111.46 implies a total return of 33.25% with all from capital gains based on a stock price of $83.65.
The most recent analysts’ recommendation on Stock Chase is a Do Not Buy. Analysts are worried about tariffs. Some like other companies better. Stock Chase gives this stock 5 stars out of 5. Rather hard to believe. Amy Legate-Wolfe on Motley Fool thinks that Bombardier stock’s long-term prospects appear promising if it can continue executing its strategy effectively. Motley Fool thinks that once over tariffs uncertainty settles, the company will adjust its operations, and the stock could recover and continue its rally. The company put out a Press Release about its fourth quarter of 2024.
Simply Wall Street via Yahoo Finance talks about Bombardier’s fourth quarter. There are five warnings out of interest payments are not well covered by earnings; negative shareholders’ equity; large one-off items impacting financial results; profit margins (3.9%) are lower than last year (5.7%) and there has been substantial insider selling in the past 3 months.
Bombardier designs, manufactures, markets, and provides parts and maintenance for its large, long-range Global and medium-to-large Challenger aircraft families of business jets. Most of the company’s revenue is generated in North America, with operations in Europe, North America, Asia-Pacific, and other markets. Its web site is here Bombardier Inc.
The last stock I wrote about was about was Emera Inc (TSX-EMA, OTC-EMRA) … learn more. The next stock I will write about will be H & R Real Estate Trust (TSX-HR.UN, OTC-HRUFF) … learn more on Wednesday, March 12, 2025 around 5 pm. Tomorrow on my other blog I will write about Things to do for Dementia Risk…. learn more on Tuesday, March 11, 2025 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
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