BBD.BJust doing some calculations about the plight of Bombardier shares, that I can share with you.
With this current shorting/manipulation of the stock they dropped the price to earnings ratio, to 5.5. The Industry average 12.5 range. IMHO the share pice should be at least $3.00/share for today's price to come close to the 12.5 trading multiple of their pears.
On the (LTD) side. If we could reduce the LTD to $3.8B range as I would suspect it going to be, by 2025. This will give a 3.5 times ratio. This is ideal, instead of almost 9 times ratio today. This was reaffirmed to us by Bart in the Investors day presentation, by BD Real charts.
It's really quite simple. As I was saying in an earlier post. They are reducing LTD by $400M yearly right now, for the next 3 years. 2023 May be higher, and 2024 maybe higher Debt reductions, but they won't want to Jeopardise their strong liquidity position going forward. So they'll probably play it safe, only putting in $400M yearly from now till 2025. That may of course change depending on how strong the Service side is, and how strong the Book to Bill ratio. If Book to Bill will be/or stay strong, in the next 2 to 3 years, which I suspect it'll stay above 1 to 1.2 range. Then they could easily increase the deliveries from the current 120 planes to the 135 range in 2023. When the 2023 delivery increase will happen, then everything changes in the +FCF side, because the Margins are getting better as well, from all the cost cutting going on LTD, and operating expenses, SG&A is getting reduced, so is R&d, at the moment. The marging will get better from the Pearson Plant production side as well. So 2025 could see $1B debt reduction.
So from what I'm seeing happening overall is, that the market for BJ's is strong, and BD & EM are in the driver seat.Their orders are steady, and production levels are going to be known for 2 to 3 years, because of the balanced Backlog order intake. Their costs are going down from LTD and Operating Expenses, and therefore their Margins, are going way up. Their Revenues are increasing from the Service side, & their plane production will increase. It's all perfect for them right now. Couple that with the $1.7B in cash Reserves on hand, and there is no fear of cycles right now, because they have the capability to handle a hiccup here and there. By my estimations. When we hit 2025 with FCF of $1.5B & +FCF of aroung $1B, we should be an EPS of around 50 Cents a share conservatively.
Smooth sailing ahead guys. Keep your eyes on deliveries & Book to Bill & everything else will take of itself. Enjoy the rest of your weekend. Cheers 859