bombardier

BOMBARDIER INC. (Toronto symbols BBD.A $4.52 and BBD.B $4.50; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.8 billion; Market cap: $8.1 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.2%; TSINetwork Rating: Average; www.bombardier.com) has won an order for five of its new CSeries passenger jets from Iraqi Airways....

Canadian aerospace and transportation giant Bombardier is counting on the sales of its CSeries business jets to spur its growth. In September we reported on the new jet’s first successful test flight: click here to see the article. Here is our latest report on Bombardier’s progress from The Successful Investor. ...

BOMBARDIER INC. (Toronto symbols BBD.A $4.62 and BBD.B $4.57; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.8 billion; Market cap: $8.2 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.2%; TSINetwork Rating: Average; www.bombardier.com) recently began test flights of its CSeries jet, which seats 100 to 150 passengers. The new CSeries is quieter and 20% more fuel efficient than comparable aircraft.

The company now expects the CSeries’ development costs to total $3.9 billion, up 14.7% from its original 2008 estimate of $3.4 billion (all amounts except share prices and market cap in U.S. dollars). That’s because new accounting rules, which took effect in 2011, have forced Bombardier to include interest costs in the overall estimate.

Bombardier now has firm orders for 177 CSeries jets, plus options for 226 more. If the buyers exercise all these options, the resulting 403 orders would be worth $29 billion. The company aims to begin delivering the planes by the end of 2014.
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MANITOBA TELECOM SERVICES INC., $29.00, Toronto symbol MBT, recently agreed to sell its Allstream subsidiary to a private company controlled by an Egyptian billionaire. Allstream provides integrated telephone, Internet and other communication services to over 50,000 businesses across Canada, as well as government agencies. Manitoba Telecom planned to contribute $130 million of the $405 million it would have received from the sale to its underfunded employees’ pension fund. However, Ottawa blocked the deal on national security grounds....

BOMBARDIER INC. (Toronto symbols BBD.A $4.62 and BBD.B $4.57; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.8 billion; Market cap: $8.2 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.2%; TSINetwork Rating: Average; www.bombardier.com) recently began test flights of its CSeries jet, which seats 100 to 150 passengers....

Here’s another item in the series we started last week, about the way investors value individual stocks. Q: Pat: Bombardier has annual sales of $18 billion, earnings of $600 million and cash of $3 billion. CP Rail has sales of $6 billion, earnings of $1 billion, and cash of $442 million. Why then is Bombardier’s market cap of $9.3 billion so much lower than CP’s market cap of $26.0 billion? CP is just a random comparison, but I don’t understand why an international giant like Bombardier has such a low value....

Bombardier, $4.97, symbol BBD.A on Toronto; $5.25, symbol BBD.B on Toronto (Shares outstanding: 1.8 billion; Market cap: $9.3 billion; www.bombardier.com), is the world’s third-largest commercial aircraft maker, behind Boeing and Airbus. It is also the world’s leading passenger railcar manufacturer. Bombardier’s shares have moved up from $3 a share late last year, but are still trading below the high of over $7 they recovered to after the stock hit a low of just over $2 in early 2009 (along with stock markets in general) in the wake of the financial crisis. The company’s backlog now stands at a record $65.5 billion on June 30, 2013. The backlog is split evenly between aerospace at $33.4 billion, and transportation at $32.1 billion. The new CSeries is pushing the aerospace backlog higher, while transportation is virtually unchanged from a year earlier....

In 2009, U.S. President Obama set a goal to provide 80% of Americans with access to high-speed rail within 25 years. This led to the creation of the High-Speed Intercity Passenger Rail Program (HSIPR), a plan to create a high-speed rail network in the U.S. However, high-speed rail is very costly, and a lack of committed long-term funding is a significant obstacle to its development. There are two main approaches to building high-speed rail: (1) improving existing tracks and signalling to allow trains to reach speeds of up to 110 miles per hour, generally on track shared with freight trains; and (2) building new tracks dedicated to high-speed passenger rail service to allow trains to travel at speeds of 200 miles per hour or more....

United Technologies operates in two highly cyclical markets: building construction and aerospace. It gets around 20% of its revenue from military clients, so recent government cuts to defence spending also add to its risk.

However, the company is in a strong position to profit from several long-term trends.

For example, sales of its jet engines should rise as airlines replace their aging fleets....

UNITED TECHNOLOGIES CORP. $106 (New York symbol UTX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 917.5 million; Market cap: $97.3 billion; Price-to-sales ratio: 1.6; Dividend yield: 2.2%; TSINetwork Rating: Above Average; www.utc.com) has four main divisions: Building & Industrial Systems (formed in September 2013) makes heating and air-conditioning equipment under the Carrier brand, as well as burglar alarms, fire-safety products and Otis elevators (50% of 2012 revenue, 61% of earnings); Pratt & Whitney manufactures aircraft engines (24%, 19%); Aerospace Systems makes aircraft controls (14%, 11%); and Sikorsky makes helicopters (12%, 9%).

The recession cut United Technologies’revenue by 11.1%, from $56.8 billion in 2008 to $50.5 billion in 2009. Revenue quickly turned around and rose to $57.7 billion in 2012. The U.S. government is the company’s biggest customer and accounts for roughly 18% of its yearly revenue.

Earnings fell 17.0%, from $4.9 billion in 2008 to $4.1 billion in 2009. The company is an aggressive buyer of its own shares. As a result, its earnings per share fell at a slower pace of 15.6%, from $4.74 to $4.00. Thanks to the higher revenue, earnings improved to $5.2 billion, or $5.35 a share, in 2012.
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