> Bombardier Inc.

Bombardier Inc.

Posted on Tuesday, October 30, 2012 | No Comments

Buy, Hold, or Sell?


Bombardier is experiencing significant growth in emerging markets, and is taking advantage of this by shifting its focus towards non-US customers. Demand in many regions remains high and above the world average, including Brazil, Latin America, and Asia-Pacific. China and Europe, with their recovering economy, are going to be one of the major players in the company's growth. Bombardier also secured a $7.3 billion order with Buffet's NetJets. This is quite important, as its the largest purchase agreement in the history of private aviation. In addition, its new CSeries of jets, being more environmentally friendly and so on, has a significant amount of orders and may play a part in company growth. It is expanding its operations too -- in April 2012, it opened a new sales and marketing office in Shanghai. In Nouaceur, Morocco, it built a new manufacturing plant. This is big news.


The company experiences quite a variety of risk, being in such a volatile industry. Oil prices, appreciation of the Canadian dollar (less exports), subordinate voting share structure (The CEO Pierre Beaudoin and his family own 64% of total shareholder votes), volatility of airline customers (Air Canada, anyone?), etc. These all impact the company and impact our decision on whether to buy, hold or sell.


Based on analysis of EBITDA and FD EPS, I suspect the price will go up to $4.65-4.80. This is over $1.00 of a capital gain.

Buy it.

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