$1,000 Invested in Bombardier Stock 5 Years Back Would Be Worth This Much Today!

Bombardier stock has surged 500% since mid-2020 easily crushing the broader market returns. But is BBD stock a buy or a sell now?

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

One of the most popular stocks on the TSX is Bombardier (TSX:BBD.B), a company that operates in the aerospace manufacturing space. Valued at a market cap of $6 billion, Bombardier stock has gained close to 60% in the last 12 months, crushing the TSX index by a wide margin. In fact, since July 2020, BBD stock has surged by a monstrous 500%.

But while Bombardier stock has delivered staggering returns in the last two and a half years, it has underperformed the TSX if you widen the horizon. For example, in the last five years, BBD stock is down 30% and has declined by 38% since February 2013.

Created with Highcharts 11.4.3Bombardier PriceZoom1M3M6MYTD1Y5Y10YALL20 Feb 201320 Feb 2023Zoom ▾20142015201620172018201920202021202220232014201420162016201820182020202020222022www.fool.ca

So, a $1,000 investment in BBD stock five years back would be worth $688 today. Comparatively, a similar investment in the TSX would be worth close to $1,600.

Investing in the stock market is a tricky proposition, especially if you are buying shares of individual companies. It’s imperative to analyze the quantitative and qualitative factors surrounding the company, which may require a ton of expertise. Further, most of the stocks, including Bombardier, struggle to outpace the broader market over time, thereby burning investor wealth.

Keeping this in mind, let’s see if Bombardier can continue to move higher in 2023 and beyond.

Is BBD stock a buy or a sell?

Bombardier has a fleet of 5,000 aircraft in service with corporates, charters, governments, and high net-worth individuals. Three years back, the company was grappling with falling sales and negative profit margins. Its revenue fell from US$15.8 billion in 2019 to US$6 billion in 2021. Its weak financials also led credit rating agencies to lower their outlook on Bombardier.

In 2020, Bombardier exited several businesses to focus on its business jet vertical. This pivot allowed the company to shore up its balance sheet by lowering debt to US$6.4 billion in 2022, down from over US$10 billion in mid-2020.

After a decline in sales between 2020 and 2021, Bombardier reported a 14% increase in revenue in 2022. Analysts tracking the stock expect sales to rise by 12.1% to $10.5 billion in 2023 and by 4% to $10.9 billion in 2024. Comparatively, its adjusted earnings are forecast to expand to $5 per share in 2024 from $1 per share in 2022.

So, BBD stock is priced at 0.65 times forward sales and 25 times forward earnings, which is not too expensive considering its growth estimates. Analysts, in fact, expect earnings to grow by 173% annually in the next five years.

Bombardier ended 2022 with an order backlog of US$14.8 billion, providing investors with enough revenue visibility. It also delivered 123 aircraft in 2022 as lockdown rules were relaxed globally.

Bombardier is deleveraging its balance sheet

Bombardier is expanding its global services network to capture a greater share of the market where it operates, providing shareholders with regional diversification. The company also aims to deleverage its balance sheet significantly by 2025 and is targeting a net-debt-to-EBITDA ratio of 3 times while reducing annual interest expense by US$250 million.

Since December 2020, it has reduced long-term debt by US$4 billion, taking its gross debt to US$6 billion in 2022.

Bombardier is a company that has turned around its business quite remarkably. BDB.B stock is currently trading at a discount of 10% compared to consensus price target estimates.

Should you invest $1,000 in Bombardier right now?

Before you buy stock in Bombardier, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Bombardier wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Investing

dividend growth for passive income
Dividend Stocks

Why I’d Invest in Canadian Value Stocks for Both Stability and Growth

Three Canadian value stocks are buying opportunities for investors looking for stability and growth.

Read more »

investment research
Dividend Stocks

Got $15,000? 3 Blue-Chip Stocks Every Canadian Should Consider

Here's why investing in blue-chip TSX stocks such as CNQ and CNR should derive outsized gains in 2025 and beyond.

Read more »

A plant grows from coins.
Energy Stocks

2 Discounted Dividend Stocks With Significant Growth Potential

If you’re in search of income and capital appreciation in the long run, here are two discounted Canadian dividend stocks…

Read more »

protect, safe, trust
Dividend Stocks

Where I’d Allocate $20,000 in 2 Safer High-Yield Dividend Stocks for Retirement Needs

Here are two safer, high-yield dividend stocks I'm looking at for my retirement needs.

Read more »

Senior uses a laptop computer
Energy Stocks

Here’s How Investors Can Turn $15,000 in a TFSA Into $235,000

Energy stocks aren't created equal, and this one might be one of the best of the batch.

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

3 Reasons I’m Considering Enbridge Stock for a $5,000 Investment This April

I'm considering Enbridge stock to provide some defensive appeal and a juicy dividend to my long-term portfolio.

Read more »

monthly desk calendar
Dividend Stocks

A 9.2% Dividend Stock Paying Cash Every Single Month

With one of the highest dividends out there, this dividend stock deserves attention in your portfolio.

Read more »

Happy golf player walks the course
Dividend Stocks

Build a Powerful Passive Income Portfolio With Just $20,000

If you are worried that the bear market could reduce your savings, these stocks can build a powerful passive income…

Read more »