We're Not Out Of The Woods YetI'm not going to try to estimate earnings results. That kind of thing is probably best left to those who speculate on the short term. Long term investors shouldn't be overly concerned about results for any particular quarter.
Bombardier has taken hits in both regional jets and business jets and has cut production rates and employment rolls. So despite recent and significant orders added to the company's backlog this time around, it doesn't seem reasonable to expect results to surprise much to the upside.
In addition, the rising C$ in comparison with its U.S. counterpart creates a strong headwind making Bombardier aircraft more expensive compared to U.S. competitors.
On the bright side, those large orders do help quite a bit. Any firm orders consist of downpayments which offer an immediate boost whereas the remaining payments take place over time as aircraft are delivered.
Bombardier is making good progress cutting costs and increasing productivity, however, such improvements tend to come very gradually and may only be noticable over longer periods, rather than quarter-to-quarter, and can be hard to see in the shadow of a down market and shifting currency values.
On of the brightest spots is probably the fact that the company has made significant progress reducing its debt load. A drop from the 60% level of debt to capitalization to a more modest 54% should put Bombardier much closer to the magical 50% line where it will show up more frequently on big money investment screens.
In sum I don't think we should expect crackerjack results this time around. But neither should we see any big surprises to the downside. We're probably witnessing a bit of a run-up from the short term players speculating on the possibility of an earnings surprise to the upside here, most of which will be given back once the limelight moves on to another company's earnings results,
There's an old joke about a bachelor being a guy who "comes and goes". Short term players are a lot like that.
But for those of us holding for the long term should be encouraged by the fact that new, and large orders, for C Series, Q-400s, Highspeed rail projects and commuter rail line equipment - and the better results which accompany them, will eventually move this stock much higher.