Analysts rate Bombardier Inc. (BBD-B-:TSX) with a consensus “Buy”

Bombardier's Earnings & Stock Analysis

Bombardier Inc Stock Forecast:

According to 23 analysts’ predictions for Bombardier Inc‘s stock, the average target price for the company over the next 12 months is CAD 63.42. The average rating from these analysts is Buy. However, Stock Target Advisor‘s analysis of Bombardier Inc’s stock shows a Neutral rating based on 2 positive and 2 negative signals. Bombardier Inc’s stock price at the last closing was CAD 63.56. The stock’s price has increased by 2.58% over the past week, but has decreased by 3.26% over the past month. Over the last year, the stock’s price has increased by 71.78%.

BBD-B:CA Ratings by Stock Target Advisor

Analysts Coverage Change:

  • Scotia Capital maintains an “Outperform” rating for Bombardier with a $83 target price.
  • STA Research maintains a Hold rating for Bombardier with a $51 target.

Positive Fundamentals:

Bombardier is a company that has reported positive cash flow and free cash flow over the most recent four quarters. Positive cash flow means that the company has generated more cash inflows than outflows from its operating, investing, and financing activities. Positive free cash flow means that the company has generated cash inflows after accounting for capital expenditures required to maintain or grow its business.

Positive cash flow is an important financial metric because it indicates that a company is generating enough cash from its operations to pay for its expenses, investments, and dividends, without having to rely on external financing sources such as debt or equity. Positive cash flow can also give a company more flexibility to pursue growth opportunities, pay down debt, or return value to shareholders through buybacks or dividends.

Positive free cash flow is even more important as it represents the cash that a company generates after accounting for all of its capital expenditures. Free cash flow is a key metric for investors because it shows how much cash a company has available to pay dividends, buy back shares, or invest in growth opportunities. A positive free cash flow also indicates that a company is able to generate cash from its core business operations, and not just from external financing sources.

Negative Fundamentals:

The statement highlights two major concerns regarding the Bombardier stock, namely poor risk-adjusted returns and high volatility.

Firstly, the company has been delivering below median risk-adjusted returns compared to its peers, meaning that investors are not receiving adequate compensation for the level of risk taken. This is a red flag for investors as it indicates that the company is not efficiently utilizing its resources to generate profits. Additionally, even if the company appears to be outperforming its peers on returns, the returns are unpredictable, which increases the uncertainty of future gains.

Secondly, Bombardier stock has been highly volatile over the past five years, which means that the returns have fluctuated significantly, often above the median for its sector. This can be a warning sign for investors who have a lower risk tolerance and prefer a stable and predictable return. Investing in a highly volatile stock requires a strong stomach and the ability to withstand the ups and downs of the market.

 

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