road to success few days ago i have posted my thoughts about future of bombardier stock value and i have mentioned few of the target that needs to be reached until we will see 100 cad value:
1.profitablity REACHED we should expect steady and record profit in 2023 Q4 and specially in 2024.
-in 2023 the cost of production ramping and the cost of loading the maintenance divison with spare parts will efect the profit and the FCF.The value of the spair parts are not work in process for a specific order .They are considered i think expenses as long they are not tight to a order.(still an important cash usage in 2024 to increase the production to 150 planes)
-in 2023 bombardier will need to pay off the cost of the new facility in toronto .Big MONEY.Again the cash flow will efected but not the profit in 2023 .This value is an investment and will be part of an amortization period once is operating so for 2024 depending on bombardier ,anagement they will write off a certain value .(small value to be payd in 2024)
- in 2023 the cost of the expansion of maintenace division will be paid off (small value to be paid in 2024).
2. Margin ,partially reached .I expect 2024 to become steady above 14%-15% wich is close to normal for a bussiness/luxury industry.
Here i have a major concern . Sales forecast for 2023 7750 mil. Bombardier has 15200 employees .This means that for every employee the sales is allmost 500000 us dollars HUGE. Boeing at pick was selling 550000 us dollars for every employee and the EPS was huge .Can you guys imagine how much Bombardier spends on employees pension , benefits and interes for the depth MORE THAN HUGE.In this moment the profit is taken by this expenses .I am not sure when the profit will be shared with share holders but i dont see it sooner than 2025 .THIS IS THE REASON FOR STOCK VALUE VOLATILITY.
The market was expecting a news related to dividends maybe?
3. military divison still couple/few years away to maturity ,but the backlog will get some help from this divison in 2023 and specially in 2024 and beyond .One bombardier military aircraft is worth around 1.5 to 1.7 times the normal price.
4.more dept to be paid in 2023 NOT EXPECTED. around 750 mil in 2024.
5. new projects .nothing major ahead and they better keep it this way for now.
So as of now i still think/hope 100 dolars stock value in 2025 spring.Still many boxes to check until stability.
And i did not take in consideration a recesion.