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As a brief word of introduction, I'm hankering for more Canadian content here, so I'll try to lead by example. I'm posting a series of 3 RM rankings of Canadian companies, and I'm going to add more when I have time. Only one of the first three can be purchased on a US exchange. Tough cookies -- none of the stocks regularly discussed can be purchased on a Canadian exchange. :)

Analysis for: Bombardier (TSE: BBD.B)

Financial AnalysiCompany Being Evaluated Competitor #1 Competitor #2 Competitor #3

Bombardier Inc Boeing Polaris Gulfstream
Annual ending Year-ago PerioYear-over-Year Annual Annual Annual
31-Oct-98 31-Oct-97 Growth 30-Sep-98 30-Sep-98 30-Sep-98
Income Statement . . .
Sales 7,456 5,747 29.7% 39,047 845 1,687
Cost of Goods Sold* 6,673 5,143 29.7% 35,079 647 1,323
Net Income 554 402 37.7% 655 8 168
Shares Outstand 680 676 0.5%

Balance Sheet . . .
Cash & Equivale 269 527 -49.0% 2,435 14 11
Current Assets 5,368 7,728 -30.5% 18,300 241 1,046
Short-term Debt 2,998 2,062 45.4% 228 0 0
Current Liabili 6,712 4,613 45.5% 13,295 269 577
Long-term Debt 1,801 1,554 15.9% 6,567 15 374
Competitor
Margins & Ratios . . .
Gross Margins 10.5% 10.5% 0.0 10.2% 23.4% 21.6% 18.4%
Net Margins 7.4% 7.0% 0.4 1.7% 1.0% 10.0% 4.2%
Cash-to-Debt 0.06 0.15 -61.6% 0.36 0.95 0.03 0.34
Net Cash -4530.7 -3089.6 N/A -4360.0 -0.8 -363.2 -1574.7
Fool Flow Ratio 1.37 2.82 -51.4% 1.21 0.84 1.79 1.28
* COGS figure is extrapolated based on 1998 and 1997 performance -- not included in quarterly report


Ranking Rule Makers

1) Brand Points (0-1) 3) Financial Dire Points (0-3)
Familiarity 1 Sales Growth 3
Openness 1 Gross Margins 2
Optimism 1 Net Margins 3
Legitimacy 1 Shares Outstandin 2
Inevitability 1 Cash-to-Debt 0
Solitariness 0 Fool Flow Ratio 3
Humor 0 Expansion Potenti 3
Subtotal 5 Subtotal 16

2) Financial Loca Points (0-2) 4) Monopoly Statu Points (0-4)
Mass Market Habit 0 Gross Margins 0
Gross Margins 0 Net Margins 2
Net Margins 1 Net Cash 0
Cash-to-Debt 0 Fool Flow Ratio 0
Fool Flow Ratio 0 Convenience 2
Your Interest 1 Subtotal 4
Subtotal 2
5) Your Enjoymen 1

Total Score 28 Fourth Tier



First, a few comments about the data above. As noted, BBD's COGS were interpolated, based on 1998 and 1997 figures. Basically, I tried to get the gross margin correct, or at least comparable, but the COGS figures are technically figments of my imagination. Still, they are similar to what they would be, and besides, they don't factor significantly in the ranking. (The Bomber gets a whopping total of 2 points via it's gross margins)
Also, I chose three somewhat different companies, because of BBD's diverse nature. BBD is the #3 civilian aerospace company worldwide, so I compared it against #1 Boeing and against Gulfstream, a potentially more direct competitor. Polaris is a major snowmobile/jetski manufacturer, and fits with BBD's recreational products division. I wasn't sure who to compare BBD with for the transportation (read:trains) division, so this major part of the company's business is ignored (as well as a couple of minor areas.)
Explanations of the discretionary points:
Up here in Canada at least, 'ski-doo' is a genericised term for snowmobile, much like kleenex or band-aid. Familiar.
Their jets are geared to private, corporate and airline users, and even kids use ski-doos. Open.
Mass transit is one of the best potential saviours of urban transit, also, I'm hoping someday to make enough in the market to buy my own jet. :) Optimistic.
While most people still drive, and more people still ski than ski-doo, their products are relatively legitimate.
I'm a transportation engineering student, and while I've mostly been taught roads, I know that any city with a half million people or more seems to have, be installing, or be expanding rail transit systems. They're pretty much inevitable.
The Bomber competes head-to-head with Polaris, Gulfstream, Siemens, and many other companies. They have few unique prducts (their firefighting aircraft and snowmaking apparatus are the only ones that leap to mind), so they aren't solitary.
Humor? Quite honestly, I'm not sure that vehicles travelling 600 mph should have anything funny about them. For cola or pants, humor's great. For trains?

I think that The Bomber has decent expansion potential, as cities increase mass transit and as regional air travel increases. The enjoyment, convenience, interest and Mass Market points should be self explanatory.

So, what does all this tell us? Well, that transportation equipment companies aren't likely to be Rule Makers. BBD.B is in a resource-heavy business. That being said, it has an interesting product mix and market niche (I can see Polaris getting killed in a recession, for example), and is a leader in it's field, despite what the numbers say. Bombardier is a good company, just not a major Rule maker.

Kevin :)
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