RE:RE:RE:RE:RE:Not very encouragingDo not accuse me of bashing Bombardier. While we all hope that it will do well, just posting our wishes wil not do anything. Posts like the one that MMM posted recently stating that the boys are working very hard to get the planes out the door Go Bomber Go are infantile at best.
Here is are some of the reasons why 'The Investment Reporter' monthly financial news letter state that it has moved Bombardier from a hold to a SELL. It states:
1) Bombardier is difficult to value. One common yardstick of a stock"s value is its P/E ratio.
The trouble is, in 2019 the company is expected to lose C$0.17 a share. So we can't calculate a forward P/E ratio to value the shares.
2) In 2020 Bombardier is expected to earn C$0.05 a share.
Divide the share price by next year's expected earnings and you get a P/E ratio of 40.5 times.
That seems excessive for a poor performer such as Bombardier. Then again, P/E ratios are less useful in valuing cyclical companies.
3) A secound common yardstick of value is the ratio of the price to the book value per share. The difficulty is that Bombardier's bookvalue is negative C$3.53 a share. That is, the company has lost more money than it has ever made. With negative shareholders' equity, we can't calculate price-to-book ratio.
4) A third common yardstick of value is a ratio of a company's share price to its cash flow per share. In the four latest quartes, Bombaried generated cash flow of only $161 million. We calculate that its price to cash flow ratio is 22.6 times. That's far worse than the ratio of five times or less that we look for.
Bombardier carries a lot of debt. We calculate that the company's net debt-to-cash-flow ratio is in excess 43.9 times. This is far more than our comfort zone of two times or less.
Sometimes we calculate a company's net debt-to-equity ratio as an alternative way of assessing its debt. But since Bombardier has negative equity, we can't calculate this ratio either.
With so much debt outstanding, it looks unlikely that Bombardier will pay a sustainable divedend any time soon.
Another irritation is that at last count, the family owned 279,661,229 shares of Bombardier. This represents only 10.2 per cent of the 2,434,550,399 shares outstanding. Even so, the family controls the company despite doing a poor job in recent years.
Sell Bombardier Inc. It's no longer a Key Stock.
My comment.
Keep in mind that this is a paid subsciption investment news letter that relies on credibility to continue maintaining subscribers.