BBD -> Stock with a 100% return in 2024 (investorplace.com) Bombardier (OTCMKTS:BDRBF), the Canadian aircraft manufacturing company, recently smashed expectations in its third quarter earnings report after months of share price decline. Naturally, the stock is now up 23% from its trough. However, in my view, there is still ample room for this company to deliver double-digit upside even from today’s levels.
In the third quarter, Bombardier’s revenues jumped 28% year-over-year to $1.86 billion, handily beating estimates by $114 million. Adjusted earnings per share came in at 73 cents, crushing estimates by 27 cents. The company also generated strong free cash flow of $80 million in the quarter.
With its commercial aviation business now stabilized after years of restructuring, Bombardier is firing on all cylinders. Its aftermarket services business saw 11% revenue growth as it continues ramping up its worldwide service center footprint. Aircraft manufacturing revenues were up 34% alongside higher delivery volumes. Adjusted EBITDA margins also expanded 100 basis points to 15.4% on operational improvements.
In my view, even if investors were to pay double Bombardier’s share price today, which would equate to a $7.3 billion market cap, the valuation would still be reasonable. At these levels, its forward price-earnings multiple would be around 20-times and forward price-sales multiple just 0.88-times – hardly expensive valuations for a company growing earnings and revenues at double-digit clips.
Furthermore, Bombardier maintains a solid $14.7 billion order backlog, equivalent to 18-24 months of manufacturing. It expects to deliver over 130 aircraft in 2023, implying a robust Q4 delivery schedule. The company also reaffirmed its full-year free cash flow guidance of above $250 million.
With the stock still down nearly 5.5% in 2023, I see significant upside potential as the market recognizes Bombardier’s much improved financial position. If we look ahead to 2026 and exclude potential earnings beats along the way, Bombardier trades at just 4-times earnings even at today’s depressed valuation. Thus, I believe 100%+ upside over the next 12-18 months is achievable as this high-quality aerospace company continues executing strongly. The average Wall Street analyst sees almost 160% one-year upside with BDRBF stock. https://investorplace.com/2023/11/top-3-stocks-for-100-returns-in-2024-bdrbf-expi-phi/