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Author: jammerh Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 2881  
Subject: VL On BBD Date: 6/18/2012 3:42 PM
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Valueline reports on Bombardier in its Aerospace and Defense section once each quarter. The new report just arrived here so - as in previous quarters - I'll type out a snippet or two from the text of the report along with a few of the numbers, but I'd recommend anyone interested in viewing the entire report visit their local library. Most larger public libraries, and many university libraries keep copies of Valueline on their shelves or at the reference desk.

The report quotes Bombardier at $3.74 with a PE of 8.3 and a dividend yield of 2.7%

It indicates Bombardier's Financial Strength at B, its Stock Price Staility at 45, its Price Growth Persistence at 30, and its Earnings Predictability at 50.

Here's an excerpt from the text:

"Bombardier has gotten off to a slow start in 2012. The Aerospace segment where sales are down 31% from last year is leading the decline. The aerospace environment shows signs of stabilizing. However, the recovery at Bombardier, looks shaky in the short term, as the companydelivered seven commercial jets compared to 23 last year. Meanwhile weak business jet utilization in Europe (down again in the first quarter) contributed to lower-than expected deliveries. Good management of cost of goods sold, on the other hand, kept earnings decent. ($0.10 a share) compared to recent showings.

Bombardier's latest CSeries plane should see its first test flight by the end of the year, barring any holdbacks. Meanwhile, the Transportation segment should move more to the foreground this year. Aerospace's revenue share should gradually diminish as the company focuses on the new project developments. We think this mix should keep earnings more stable as Transportation appears less subject to the business cycle. We are maintaining our share net estimate of $0.45 (which allows for some quarterly volatility).

We expect moderate growth for 2013 in a decent economic environment. We are maintaining our expectation that earnings tick up to $0.55 a share by that time, reflecting an inflection point for a recovery at Bombardier.

Long term, Bombardier seems to have the potential for considerable earnings growth. The Transportation segment has momentum and market position, while we estimate that the CSeries project offers the potential for compelling profit. The company expects about $425-bbillion in sales in the 100-149 segment to 2030; CSeries is an attempt to establish leadership position here*.

Bombardier stock still looks fairly inexpensive, but requires patience. Based on our expectations for earnings growth, we think capital appreciation is above average at this entry point. This may be an opportune time to establish long-term positions, thanks to the recent pullback in price and the relatively quiet period in CSeries development (before the lead-up to its first test flight).

June 15, 2012"

Note: From jammerh: all in brackets above is from the VL writer of this report, but I would like to try to clarify what I think might have been meant when he indicates "CSeries is an attempt to establish leadership position..." since it isn't elaborated in the report.

CSeries addresses a market where there is no current competiton. It is larger than Embraer's ESeries and smaller than many Airbus 320s and Boeing 737s although some of the smallest variations of these may compete with the largest CSeries - especially if it is stretched as seems likely in my view.
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