Blue Bird Corporation (BLBD) stock price has done well as it soared by over 137% in the last twelve months, giving it a market cap of over $1.4 billion. It has jumped by over 530% from its lowest level in 2023.
Recently, however, the stock has lost momentum, falling by over 24% from its highest level this year, meaning that it has moved into a bear market.
A leading school bus manufacturer
Blue Bird Corporation is a leading American manufacturer that focuses on the narrow niche of school buses.
Established in 1927, the company has delivered almost 130,000 school buses across the country. As such, to a large extent, most Americans have been ferried by some of its products.
It has a leading market share in the industry, where it competes with Daimler’s Thomas Built Buses and IC Bus.
This is a notable industry since there are thousands of schools in the United states. Estimates are that there are over 130k k-12 schools, 6,000 colleges and universities, and 137,432 learning institutions.
The challenge, however, is that institutions stay with their buses for a long time. Data shows that the average age of a school bus in the US is about ten years, with most of them remaining in service for between 12 and 15 years.
Blue Bird has expanded its business over the years to include propane, electric, and gasoline buses.
A stable and growing business
Blue Bird Corporation is a relatively stable company that is seeing some growth in the past few years. Its annual revenue retreated from $879 million in 2020 to over $654 million in 2021.
Since then, its revenue has been growing slowly, with its figure coming in at $1.29 billion in the trailing twelve months (TTM). This growth happened as the number of deliveries jumped. It delivered 8,514 buses in 2023.
Also, the company has benefited from Joe Biden’s administration funding for electric school buses in the US. Earlier this month, the administration provided $965 million in additional funding to accelerate the sector’s transition, bringing the total amount to $3 billion.
The administration hopes to help schools replace their old diesel buses with about 8,700 electric buses.
More money will be released in the coming years since the government has over $5 billion in funding through the Inflation Reduction Act (IRA).
A case for electric school buses can be made since these vehicles require less charging. Most Blue Bird’s buses have a range of 130 miles, while the average distance traveled by these buses each day is 63 miles. Over time, the company has delivered over 2,000 electric school buses.
Strong financial results and backlog
The most recent financial results showed that Blue Bird Corporation’s business was doing well as revenue and backlog rose. It has also benefited from the improving supply chain issues in the past few months.
Its quarterly revenue rose from $39.1 million last year to over $337 million, while its diluted EPS jumped to 85 cenys. Its net income rose from $19.4 million to over $28.7 million.
This growth happened as the company sold more vehicles. It delivered 2,151 vehicles last quarter and 6,534 in the last nine months.
Most importantly, Blue Bird Corporation has a backlog of over 5,200 units, which will be fulfilled by the end of next year.
BLBD also boosted its forward guidance, with its adjusted EBITDA expected to come in at $175 million and margin to 13%.
The company also hopes that its annual revenue will be between $1.3 billion and $1.33 billion, while its free cash flow to be about $90 million.
Blue Bird hopes to continue boosting its profitability. Its long-term goal is to generate annual revenues of $2 billion and adjusted margin of 15%, giving it a profitability figure of $300 million.
Additionally, there are signs that the BLBD stock is fairly undervalued. According to SeekingAlpha, it has a trailing twelve months (TTM) price-to-earnings ratio of 14.6, which is lower than the industrials average of 23. Its forward P/E multiple of 14.6 is also smaller than the industry median of 24.
Blue Bird Corporation stock analysis
The weekly chart shows that the BLBD shares have come under pressure in the past few weeks as investors start taking profits. It has retreated by over 20% from its highest level this year.
Nonetheless, the stock has remained above the 50-week and 100-week Exponentialn Moving Averages (EMA), which is a positive sign.
Blue Bird Corporation stock has also formed a bullish flag candlestick pattern, a popular positive sign.
Therefore, the stock will likely have a bullish breakout in the coming months. If this happens, it could retest the year-to-date high of $60, which is about 32% from the current level.
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