Bombardier Inc. T.BBD.A

Earnings Estimates for Q3 and Q4

[NoNameAtAll]

I'm wondering if anyone else has been noticing the trend on earnings this year and comparing the analyst estimes.

What I am talking about, and I use Scotiabank data for these numbers, is that the results of Q1 2022 was a 0.75 loss/share compared to Q1 2021 where there was a 1.75 loss/share.  An improvement of $1.00/share.  In Q2, 2022 a similar result.  there was a 0.48 loss/share compared to Q2 2021 where there was a 1.50 loss/share.  An improvement of $1.02/share.  Both years seems to be a similar business environment for BBD and so I think comparing them is useful to see the improvement in the business that can be sustained.

Then when I look at the Analyst esimates for Q3 2022 (and it includes 13 analysts covering it), the expectation as of today is a loss of 0.39.  But, Q3 for 2021 was a loss of 1.00.  So, I'm wondering why the smaller improvement.

When I look at the Analyst estimes for Q4 2022 they are expecting profit of 0.34/share compared to a profit of 0.75/share in Q4 2021.  So, they are actaully expecting Q4 this year to be worse than Q4 last year.

This doesn't make sense with what we are seeing from the financial data.  Debt is getting paid down, margins are improving.  So, why so much smaller improvement in Q3 as compared to Q1 and Q2?  And, why would they do worse in Q4 this year given we know they are going to produce as many planes in Q4 as last year?

Finally, the thing that really doesn't add up to me is that the Analysts estimate for the Current year is a loss of 1.72.  That does not add up when you add the Q1 and Q2 losses which total -1.23 and then add on their expected Q3 loss of 0.39 and Q4 profit of 0.34.  My math takes that to an expected loss of -1.28, not -1.72.

In reality, I expect BBD will at least do as good in Q4 this year as they did in Q4 2021.  That means a year end result of -0.87.

So, I thought I would put this out there to get others' thoughts.  Are we really headed for this big of a divergence between Analysts' expecations and actual resutls?  It seems to be that earnings might become just as big of a surprise as the recent cash flow numbers.  Where I see all the articles being written now referring to BBD in a positive light when a couple years ago you couldn't get anyone to say anthing nice about the company, I'm thinking that the longs might be in for quite a ride.  

All thoughts on this are welcome.

[Form001]

All analysts works with EBITDA, cash flow, margin, EPS don't give the right picture.

[NoNameAtAll]

Sure.  But what I am talking about is the Analysts EPS estimates.  The numbers don't add up when you just add the two quarters that have occurred and what the Analysts are predicting is going to happen in the next two quarters.  Their full year EPS is way off.  Regardless of what they are working with, if the full year actual EPS does not add up to the actual four quarter

[Form001]

One thing is clear, they are all made mistake concerning the huge cash flow last quarter, that change all numbers. It's a lot more profitable that they thought. Denis Poirier analyst at Desjardins target at 82.00 from 68.75 because he knows a lot more than others analysts.

[NoNameAtAll]

Do you know what multiple Denis is using?  Scotiabank is using a 6.5 (which is much lower than BBD industry peers) and discounting expected 2025 earnings at 15%.  I'm wonding if Denis is simply using a higher multiple or he has higher expectations on earnings?

[Form001]

Yes, he probably using a higher multiple, should see 12 in 2023 if numbers are always better. With a bull market 15 and 20 is in the pipeline. Bbd top 56.00 October 1 with less numbers than the last quarter.

[lb1temporary]

The Q2 free cash flow surprise is from orders with better deposits not from a better operational  margin. That could not be guessed before the management disclosed it. Taking EPS for comparition is not the best because depreciation and special items could cause big differences, without giving a better understanding of what is occuring. EBITDA and cash flow are better. 

[NoNameAtAll]

I'm not sure what you are talking about with "EPS for comparition is not the best".  I'm not saying to use EPS to derive expected stock price.  I am saying that the analysts are predicting EPS, but their predictions for the four quarters do not add to their prediction of EPS for the year.  It is literally as simple as 1+1+1+1 does not equal 4 situation. As for

[bicente]

I believe that he dividend will be discussed this year for payment next year ... well I'm hoping ... GLRA quote=NoNameAtAll]I'm not sure what you are talking about with "EPS for comparition is not the best".  I'm not saying to use EPS to derive expected stock price.  I am saying that the analysts are predicting EPS, but their predictions for the four quarters do

[Form001]

Anybody wants dividends, we want to pay debts, less interests mean more profits.

[lb1temporary]

Sorry, I was out this morning.   You made comparaisons between 2021 and 2022 quarters by EPS. Positive EPS is a must for a company; I agree. And, it's the most important long term metric for a normal company.  But Bombardier is still in recovery. EPS, Earning multiples were not used at this stage. Why ? Because our interest is on the operational recovery, its margins, its

[PabloLafortune]

From the earnings call you would know the analyst knowledge is somewhat limited, it's a specialized field to cover the only true expert I heard was Goldman Sachs. Besides, the devil is in the detail. Earnings per share is the wrong metric. What matters is operating cash-flow and backlog. Here is what I watch: 1 deliveries per quarter - due to supply chain issues it's a challenger to

[Truthifest]

Pablo, very nice to see at least a few investors here who look at the fundamentals, both Bomber-specific as well the the macro environment. For months, macro dominated micro, driving the SP down despite the company's nice progress on it's turn around plan and the continued strong private jet demand. But now, macro is improving concurrently with micro.  Been awhile!

[PabloLafortune]

Thanks Truth. For sure the macro is hugely important to Bombardier and all business jet producers, all boats rise, right?  hopefully Bombardier gets more solid backlog over the next couple of quarters. Thing is, if the macro is not smooth, then the micro has to be, right?. Its why companies with less debt do better long term - they can weather the storms.

[Truthifest]

Yeah, the potential storm clouds from a recession, was likely worrying big investors who look at the still heavily indebted Bomber.  Cyclical + lot of debt + slowing sales = avoid, in their eyes. So, great to see a lot of the variables that add up to the avoid, improve: orders, CF, recession overhang. I think a big part of Bomber's To Do is getting the big boys to increase their

[Starsearcher80]

I think with signs such as today that the  inflationary pressures are abating, the next logical step in the market's mind is that the Fed will ease off somewhat, and in the process, especially with the strong job builid, we'll avoid a a recession. Personally, I wouldn't think that this senario was possible, even as recent as a month ago, but it does in fact seem to be playing out

[PabloLafortune]

Give it time. They say the market is forward looking but when it comes to turnaround situations like Bombardier, its definitely a rearview mirror operation.  Even though that fellow Taleb has essentially told the street that they underestimate the upside from the long tail and the downside of the high flyers, they keep doing it over and over and over - its human nature.  If you had a bad

[NoNameAtAll]

I agree with this completely.  One of the big problems with BBD is just having to show everyone that it is not the company it was and it can be trusted to concentrate on its present line of business and outcompete the competitors.  The good thing I see is that the tone of media reporting on BBD seems much better than it has been in the recent past.  No longer do we have each article

[Truthifest]

Great post, Pablo. Funny u should mention AMD. I felt that it was an under appreciated turn-around story, because the incumbent investors had experienced several failed turn-arounds, so we're blind to the "it really is different this time" facts: a far better CEO, Intel stumbling at 10nm (Charlie D's exposs were worth gold and ignored by the Street), and TSMC rocking it. Well

[PabloLafortune]

Of course truth management is critical. Lisa Su and Eric Martel are cut from the same cloth - cool customers who know their business inside out.  Whereas Intel had a business genius at the helm for years - Andy Grove RIP - and then you had a series of managers who weren't as sharp or downright bad. You know Intel shifted from memory to processors, that was a pardigm shift in the 80's.

[BestGoldigger]

You're welcome!

[BBDB859]

Great post Pablo. It's worth reading for everyone here.  This dilema of EPS of yours Nobody, isn't going to be resolved this year. The reason being is, is that you're comparing apples to oranges right now. You can't compare 2021 to 2022. Because both years are in a spending cycle and Revenue growth periods. 2021 less so on Revs of course, but higher on Capex spending. 2022

[NoNameAtAll]

Thanks for responding to the topic of my discussion - the Analyst EPS estimates.  I do accept your position that comparing 2021 to 2022 is not a worthy activity due to the changes in Capex vs LTD spend and the effect that has on the EPS.  So, I can leave that part of the discussion where it is and not bother to try to estimate EPS myself.  But what nobody has actually provided any

[MyNameIsNobody]

Maye it's a mixup because of the name I chose here but I never mentionned any worries about the EPS. GLTA - keep a straight course my friends, seems like the reward is closer than expected.

[BBDB859]

Btw. Analysts have no idea what to expect on the #'s. They get close sometimes. But they're usually off by a mile. It's their work but they don't spend enough time to do their DD properly. You're probably closer on EPS in your post, than them for Q3/4.