RE:RE:So much negativity by the shorts hereI will agree with your 0.12 EPS. Correct me if i'm wrong, but the average P/E in the industry is 20. (goes as low as 12x [Embraer] and as high as 50x [Boeing])
so 2.40 share price seems reasonable for mid 2021. Things could go wrong, but they could emerge strong and have a P/E around 40 ($4.80).. and all these figures are US, so gives you another buffer and room for error
pierrelebel wrote:
Oilsurge - "Fact is the company will still have 2.5 billion debt"
Not quite.
The reference offered by Bombardier of US$2.5 bllion net debt means :
US$1.5 billion cash and US$ 4 billion long term debt (costing about US$ 280 million annually in interest charges).
After the deal is completed in 2021, Bombardier receives the cash and sell the shares, Bombardier will have about US$1.5 billion in cash and US$ 4 billion in long term debt.
Bombardier needs to keep some cash to meet requirements of covenants with bankers and lenders (to cover letters of credit and such) and normal operations (paying employees, utilities, rent, suppliers, etc...)
Once the deal is completed, it will be on solid ground.
However, you are then looking at a company with revenues of US$ 7 to US$ 8 billion dollars, EBIT of about 7.5% (if everything goes well) leaving net profit per share of about US$0.12 at most.
Yes, it becomes a "pure play"
There is nothing wrong with that. The question investors have to answer is how much are they willing to pay for a company with limited growth and only one line of products in a very competitive industry where most competitors are larger and better financed.