I am continuing review this stock (TSX- BBD.B) today as I received the January 2009 annual report and I have not reviewed it since I received this report. I bought my shares in this company in 1987, and since that time, I have made a return of some 14% per year. This is, of course, over a very long term. This is an industrial company and therefore represents a very high risk. However, I think that everyone should have some industry stocks.
I looked at the Insider Buying and Insider Selling on this stock and there is more selling than buying. However, none of this amounts to much. I think that the company’s confidence in this stock is shown in the resumptions of dividends. The confidence will be shown more if and when the dividend is raised. It may appear that dividends increased between 2008 and 2009, but it is only that there were only two dividend payments in 2008 and there will be four payments in 2009.
In connection with the P/E, I get a current one of 11.5 based on expected earnings for this year. However, others sites are giving a current P/E ratio around 8 and 9 because of earnings to date. Both these ratios are low. I get a 5 year low average of 13, but because this stock has always been considered a growth stock, its usual P/E ratios have usually been very high. Mine are low because of the lack of earnings in 2003 to 2005.
When I look at the Graham Price, I find that the stock price is only 9% higher. This makes the Graham Price and stock price quite close. Because Bombardier is a growth stock, the Graham price is usually a lot lower than the stock price. When I look at the Price/Book Value ratio, I find the P/BV ratio to be only 60% of the 10 year average. This is certainly a buy signal as anything P/BV ratio 80% of 10 year average shows a good current price.
The only negative I see is the high accrual ratio and this is because the Operational Cash Flow is negative. Hopefully, this will change before the year end. I would think that a real positive signal would be shown when the dividends are increased.
If you look at the charts for less than 5 years, this stock has done better than the TSX and the Industrial Indexes. However, you go for a longer term, like the last 10 years, and both the TSX and the Industrial Indexes beat this stock.
When I look at recommendations on this stock, I find that there are lots of analysts following this stock and there is a wide divergent of opinion. Most analysts are in the Strong Buy and the Hold category. There are also a few in the Buy category. It will probably come as no surprise that the consensus is a Buy. (See my site for information on analyst ratings.)
Personally, I am going to hold on to my shares. I have no intentions of buying anymore at the present time. All the ratios that I review give a mixture of signals.
Bombardier is a world-leading manufacturer of innovative transportation solutions, from commercial aircraft and business jets to rail transportation equipment, systems and services. Headquartered in Montréal, Canada, Bombardier has a presence in more than 60 countries. Its web site is www.bombardier.com. See my spreadsheet at www.spbrunner.com/stocks/bbd.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets.
No comments:
Post a Comment