RE: P/E - MaherPEs are useful only as a guide and then only when comparing companies involved in exactly the same businesses. It can be and often is misleading to use PEs to compare companies involved in different businesses.
Although Bombardier has similarities with other companies involved in aerospace PE levels have different meaning even there because Bombardier is involved in different aircraft markets and a different oveall combination of business entities.
Most investors place too much emphasis on PE multiples.
You quote Bombardier's forward PE at 10, however, the latest Value Line report dated March 19, 2010 places the forward PE (Valuline consistently uses forward PEs) at 13.3, with the trailing PE at 10.9.
Of course, PE's change daily with price fluctuations, and quarterly when earnings are reported, so you may have been quoting a PE from an older report, or maybe you had the trailing PE.
The forward PE of 13.3 is based on the share price of $5.87.
By comparison Value Line places Boeing's forward PE multiple at 14.8 and its trailing PE at 36.3. Value Liine does not report on Embraer, but General Dynamics which might be a more relevant competitor, at least in business jets, has a forward PE of 11.5. Of course, GD has three other business units including Shipbuilding, Info technology (military info-tech/communications), and combat vehicles - each of which appears to be performing reasonably well.
L-3 communications which is a supplier of secure, high-data-rate communications systems, military electronics and related products has a forward PE of 11.9 and a trailing PE of 12.5.
Lockheed Martin (builds F-35s among other things), 10.7 and 10.5.
Northrup Grumman(big in shipbuilding and popular Unmanned Aerial Vehicles), 12 and 13.
Rockwell Collins (Avionics etc...) 17.3 and 17.1.
So PE's can be useful in specific situations or as a guide in screeing for investment ideas, but since the ratio between a company's earnings and its overall prospects can and do change quite a bit from quarter to quarter they probably shouldn't be employed as the sole consideration.
What PE's do tell us though is that this market has yet to fully recover since most of these PEs remain below historical averages.
You said, "Bombardier share price is lagging the shares of either BA or ERJ. ERJ backlog is much smaller than Bombardier's aerospace backlog, however, ERJ has one-tenth the Float that Bombardier has. ERJ has to earn $168 million to earn $1 per share, whereas Bombardier has to earn $1.7 billion to earn $1 per share and hence the faster growth in ERJ shares. Same can be said about BA - it has half the Float of Bombardier. "
With Bombardier's share price up significantly from its low of about $2 a couple of years back, I don't know how meaningful it can be to suggest it is "lagging" in any respect.
Bombardier was recently selected in Aviation Week's annual quality ratings as the 'Most Improved Aerospace Company" in terms of productivity for the past five years. You hardly qualify for a rating like that with laggardly performance.
Comparisons of how much it takes to earn a dollar can also be misleading. It isn't so much how much it takes to earn a specific amount such as $1.00 but what percentage that represents in terms of share value. A $1.00 improvement for Bombardier might represent near 20% improvement whereas for Embraer with it's share price at over $20 it represents about 5%.
It might be more accurate to compare what it takes each company to earn a specific percentage - but use the same percentage for both.
Thanks for your thoughts on where you see each of these companies share prices - in dollar amounts - at year end, but I'd point out that in contrast to your earlier point, it appears you expect Bombardier to perform about as well as Embraer and much better than Boeing, since $8 is about $2.something from where BBD is now, and that would be roughly a 30% improvement. Embraer's would be in roughly the same boat, whereas BA's improvement would only amount to about 25% - slightly less than Bombardier and Embraer.
Don't let dollar amounts fool you. it's the percentage of improvement which is important to shareholder results.