Commerce tensions, rising tariffs, and geopolitical surprises can wreak havoc on a portfolio that leans too arduous on U.S. publicity. For Canadian traders who need some shelter, Bombardier (TSX:BBD.B) may sound like a daring decide, however there’s a stunning quantity of substance behind the splashy title. Particularly whereas it’s nonetheless down 63% from all-time highs.
A wild journey
This can be a Canadian inventory that’s been to the brink, and again. The truth is, it’s gone from hitting all-time highs of about $442 in August, 2000 to lows of $5.26 in 2020, adjusted for the inventory merger. But right here it’s in 2025, delivering income, beating earnings, and confidently guiding for future progress. That’s no accident. And it’s why the Canadian inventory, which stays effectively beneath its all-time highs, may very well be one of many extra underrated long-term performs on the TSX right this moment.
Bombardier lately reported first-quarter 2025 outcomes that added gasoline to its turnaround story. The Canadian inventory posted income of US$1.6 billion, up 10% 12 months over 12 months. Earnings earlier than curiosity and taxes (EBIT) rose to US$243 million, and adjusted EBITDA reached US$318 million, with a wholesome margin of 20.4%. This type of profitability was as soon as unthinkable for Bombardier, however it’s rapidly turning into the norm. Web earnings was US$110 million or US$1.03 per diluted share, in comparison with US$302 million in losses a 12 months earlier. Free money circulate was unfavourable for the quarter, which is anticipated on account of seasonality, however full-year steering nonetheless requires US$250 million to US$500 million in free money circulate.
Extra to return
What’s most spectacular is the way it received right here. Bombardier is now laser-focused on its enterprise jet section, after shedding its business and rail operations. It’s streamlined, leaner, extra agile, and that’s paying off. The International 7500 continues to steer its class, and Bombardier’s aftermarket companies are a rising supply of high-margin income. The truth is, aftermarket income was up 11% 12 months over 12 months to US$424 million.
There’s no pretending this can be a secure haven Canadian inventory like a utility or a grocer. Bombardier nonetheless carries debt of US$4.7 billion at quarter-end, and the inventory will be unstable. But it surely’s additionally a pure-play aviation enterprise with a rising order backlog. As of the tip of Q1, the backlog stood at US$14.9 billion. That type of visibility isn’t simple to seek out within the industrial house, particularly for a reputation as soon as written off as a penny inventory.
The place it stands
From a valuation standpoint, the case will get even stronger. The Canadian inventory at present trades round $162, effectively off its 2000 peak, regardless of dramatically stronger fundamentals right this moment. And with anticipated full-year income of US$8.4 billion and adjusted EBITDA steering of US$1.5 billion, the Canadian inventory’s forward-looking metrics counsel loads of room to run.
Bombardier will not be for the faint of coronary heart. There are dangers tied to world demand for enterprise jets, potential delays, and inflation in components and labour. Plus, there’s no dividend, so traders are betting purely on capital appreciation. However for these prepared to carry via the cycles, this can be a enterprise that’s gaining actual traction.
Backside line
In case you’re on the lookout for a Canadian inventory to tuck into your portfolio and neglect for the subsequent decade, Bombardier may not be the apparent selection, however that may very well be precisely what makes it so compelling. Down greater than 60% from its peak, worthwhile, and projecting stable progress in a tricky economic system, Bombardier presents a contrarian wager with actual upside. The commerce tensions might rage on, however that is one Canadian firm charting its personal flight path, and traders may need a seat onboard.
