Has Bombardier Inc (TSE:BBD.B) Improved Earnings Growth In Recent Times?
Analyzing Bombardier Inc’s (TSX:BBD.B) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess BBD.B’s recent performance announced on 30 September 2017 and compare these figures to its long-term trend and industry movements. View our latest analysis for Bombardier
Were BBD.B’s earnings stronger than its past performances and the industry?
I prefer to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This allows me to assess different companies in a uniform manner using the latest information. For Bombardier, its latest twelve-month earnings is -$692.0M, which, against the prior year’s level, has become less negative. Given that these figures are relatively nearsighted, I have calculated an annualized five-year value for Bombardier’s earnings, which stands at -$981.8M. This shows that, despite the fact that net income is negative, it has become less negative over the years.
We can further analyze Bombardier’s loss by looking at what has been happening in the industry as well as within the company. Firstly, I want to quickly look into the line items. Revenue growth over the last couple of years has been relatively soft, remaining flat on average at -1.64%. Given that top-line growth is also pretty stale the key to profitability moving forward would be controlling cost growth rates. Inspecting growth from a sector-level, the Canadian aerospace & defense industry has been enduring some headwinds over the previous twelve months, leading to an average earnings drop of -21.45%. This is a significant change, given that the industry has been delivering a positive rate of 4.80%, on average, over the past couple of years. This suggests that although Bombardier is currently loss-making, whatever near-term headwind the industry is facing, the impact on Bombardier has been softer relative to its peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to forecast what will happen in the future and when. The most useful step is to assess company-specific issues Bombardier may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research Bombardier to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for BBD.B’s future growth? Take a look at our free research report of analyst consensus for BBD.B’s outlook.
2. Financial Health: Is BBD.B’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
