BOMBF
Bombardier Inc.
$13.04
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Undervalued
Trading 89.9% below fair value
You pay
$13.04
Bear
$105.40
Fair
$129.09
Bull
$152.78
Bear
$105.40
+708.2%
$5.92 × 18x + net cash
Fair
$129.09
+889.9%
$5.92 × 22x + net cash
Bull
$152.78
+1071.6%
$5.92 × 26x + net cash
Key Value Driver
Through-cycle normalized EPS ($5.92)
Implied Market Multiple
2.2x
Summary
Using 7-year normalized EPS of $5.92 at a 22x cycle multiple, the base-case value is $129.09 per share.
Warnings
Recent profits ($9.58/share) are 62% above the mid-cycle average ($5.92). Buying based on peak profits is the most common mistake with boom-and-bust businesses.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing