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Blue Bird (BLBD) Stock Moves Above 50-Day SMA: Time to Buy?
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Blue Bird Corporation (BLBD - Free Report) , a school bus manufacturer, has reached a significant support level, making it an attractive option for investors from a technical standpoint. Yesterday, the stock broke through its 50-day simple moving average (SMA), indicating a potential short-term bullish trend.
The 50-day SMA is a key indicator for traders and analysts, used to identify support and resistance levels. It is considered particularly important as it's the first marker of an uptrend or a downtrend.
This year, Blue Bird first crossed above the 50-day SMA on May 3 and stayed above it until Jul 1. From Jul 2 to Jul 15, the stock traded below the SMA but reclaimed it yesterday. Blue Bird's movement above this 50-day SMA mark suggests a positive shift.
BLBD Breaks Out Above the 50-Day Moving Average
Image Source: Zacks Investment Research
So, is it the right time to stock up on shares, or should you book profits? Let’s delve deeper into the company’s fundamentals.
6 Reasons to Like BLBD
Massive Market Opportunity: Blue Bird has been in the business of making school buses for roughly 100 years. The company has pushed forward into new areas of automotive technology, including alternative fuels and EV buses. With more than 90% of U.S. school buses still diesel-powered, BLBD has a vast market to capture. It is well-positioned to benefit from the growing demand for electric school buses, evidenced by the rise in electric school buses on U.S. roads from 767 in June 2022 to 3,769 in December 2023 and commitments increasing to 12,164 by the second quarter of 2024.
Propane Advantage: Besides battery electric buses,BLBD also utilizes gasoline and propane as alternative fuels, with propane being EPA-funded and recognized for ultra-low emissions. With an exclusive partnership with Ford (F - Free Report) and Roush CleanTech, Blue Bird has deployed more than 30,000 propane and gasoline systems for Ford's 6.8L engine, reinforcing its dominant position in the space. BLBD’s CEO stated on the first-quarter fiscal 2024 earnings call that its key competitors, IC and Thomas, have ceased offering propane or gasoline-powered school buses, reinstating Blue Bird as the sole OEM supplying these critical products.
Favorable Government and Regulatory Policies: In recent years, favorable government policies have accelerated the adoption of electric buses. Key initiatives include the EPA’s Clean School Bus Program, offering $5 billion for five years (FY 2022-2026) for zero-emission buses, DOE loans and grants, California’s Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project, New York’s Truck Voucher Incentive Program and Massachusetts’ Electric Vehicle Incentive Program. These programs help limit upfront costs for schools while lowering the operating costs of electric buses. With state governments’ increased support, Blue Bird is expected to expand its market share in the alternative fuel market.
Turnaround Efforts Paying Off: Blue Bird's turnaround strategy has proven effective. After facing challenges during the pandemic, the company implemented a rigorous plan in late 2021 to improve operations, reduce fixed costs and recover economics through pricing. This turnaround was completed in the third quarter of fiscal 2023, thereby expanding profit margins and leveraging the growing demand for EV buses. BLBD’s efforts to enhance operations, increase production efficiency, boost new order growth and strengthen leadership in alternative-powered buses have yielded results. From a loss of $11 million in the first quarter of fiscal 2023, Blue Bird has significantly improved, reporting a profit of $26 million in the last reported quarter.
Expansion & Safety Initiatives: On the last earnings call in May, BLBD stated its intention to double capital expenditure in order to expand manufacturing capacity. The company aims to ramp up production to 50 new buses per day to meet the rising demand. Beyond capacity expansion, the company is prioritizing enhancements in bus safety features, investing in supply chain capabilities and modernizing production facilities.
Raised FY24 Guidance: Significant improvements in pricing, EV mix and parts sales resulted in record results for the first half of fiscal 2024, prompting Blue Bird to raise its forecasts for the year. It expects fiscal 2024 revenues in the band of $1.27-$1.32 billion, up from $1.15-$1.25 billion guided earlier, as well as $1.13 billion recorded in fiscal 2023. Adjusted EBITDA is now envisioned to be between $145 million and $165 million, higher than the prior projection of $120-$140 million and $88 million generated in fiscal 2023.
Stock Performance & Valuation
Year to date, shares of Blue Bird have rallied roughly 94%, handily outperforming the industry, sector and S&P 500.
YTD Price Performance
Image Source: Zacks Investment Research
Competitors like Lion Electric (LEV - Free Report) witnessed a drop of 44% on a year-to-date basis. EV pioneer Tesla (TSLA - Free Report) has just moved up around 3% during the same time period.
From a valuation standpoint, BLBD is trading at a forward 12-month sales multiple of 1.15, higher than its 5-year median but lower than the industry’s 1.53. The company has a Value Score of B.
Image Source: Zacks Investment Research
Growth Estimates & Revision Trends
Arguably, nothing is more important than earnings growth, as surging profit levels are what most investors are after. The Zacks Consensus Estimate for fiscal 2024 EPS implies a year-over-year uptick of 155%.
The estimate revision trend for its current fiscal year has been notably bullish, up 90.9% to $2.73 per share over the last year. Estimate revisions for the next fiscal are also favorable.
Image Source: Zacks Investment Research
What Should Investors Do Now?
The company's turnaround has evolved into a growth narrative. With a robust market demand and an order backlog of approximately 5,900 units valued at around $850 million, Blue Bird is experiencing notable growth. The company exited the second quarter of fiscal 2024 with nearly 500 electric orders in its backlog. Initiatives like product enhancements for EVs, new safety features, complexity reduction and quality improvements are contributing to its success.
However, reliance on subsidies and grants poses a risk, potentially impacting future growth if government support diminishes. The company's efforts to diversify sales beyond EPA initiatives, particularly through its joint venture with Generate Capital, are promising. Still, investors need to monitor the progress and watch out for more non-EPA orders.
Despite these considerations, BLBD's improved financial performance, manageable debt and strategic alignment with market demands suggest a positive outlook. Investors should consider keeping an eye on BLBD for more gains in the near future, especially given the positive earnings revisions and technical strength observed in the stock.
Existing shareholders should hold onto the stock, while new investors may consider adding BLBD to their watchlist and initiating positions during market dips.
Image: Bigstock
Blue Bird (BLBD) Stock Moves Above 50-Day SMA: Time to Buy?
Blue Bird Corporation (BLBD - Free Report) , a school bus manufacturer, has reached a significant support level, making it an attractive option for investors from a technical standpoint. Yesterday, the stock broke through its 50-day simple moving average (SMA), indicating a potential short-term bullish trend.
The 50-day SMA is a key indicator for traders and analysts, used to identify support and resistance levels. It is considered particularly important as it's the first marker of an uptrend or a downtrend.
This year, Blue Bird first crossed above the 50-day SMA on May 3 and stayed above it until Jul 1. From Jul 2 to Jul 15, the stock traded below the SMA but reclaimed it yesterday. Blue Bird's movement above this 50-day SMA mark suggests a positive shift.
BLBD Breaks Out Above the 50-Day Moving Average
So, is it the right time to stock up on shares, or should you book profits? Let’s delve deeper into the company’s fundamentals.
6 Reasons to Like BLBD
Massive Market Opportunity: Blue Bird has been in the business of making school buses for roughly 100 years. The company has pushed forward into new areas of automotive technology, including alternative fuels and EV buses. With more than 90% of U.S. school buses still diesel-powered, BLBD has a vast market to capture. It is well-positioned to benefit from the growing demand for electric school buses, evidenced by the rise in electric school buses on U.S. roads from 767 in June 2022 to 3,769 in December 2023 and commitments increasing to 12,164 by the second quarter of 2024.
Propane Advantage: Besides battery electric buses,BLBD also utilizes gasoline and propane as alternative fuels, with propane being EPA-funded and recognized for ultra-low emissions. With an exclusive partnership with Ford (F - Free Report) and Roush CleanTech, Blue Bird has deployed more than 30,000 propane and gasoline systems for Ford's 6.8L engine, reinforcing its dominant position in the space. BLBD’s CEO stated on the first-quarter fiscal 2024 earnings call that its key competitors, IC and Thomas, have ceased offering propane or gasoline-powered school buses, reinstating Blue Bird as the sole OEM supplying these critical products.
Favorable Government and Regulatory Policies: In recent years, favorable government policies have accelerated the adoption of electric buses. Key initiatives include the EPA’s Clean School Bus Program, offering $5 billion for five years (FY 2022-2026) for zero-emission buses, DOE loans and grants, California’s Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project, New York’s Truck Voucher Incentive Program and Massachusetts’ Electric Vehicle Incentive Program. These programs help limit upfront costs for schools while lowering the operating costs of electric buses. With state governments’ increased support, Blue Bird is expected to expand its market share in the alternative fuel market.
Turnaround Efforts Paying Off: Blue Bird's turnaround strategy has proven effective. After facing challenges during the pandemic, the company implemented a rigorous plan in late 2021 to improve operations, reduce fixed costs and recover economics through pricing. This turnaround was completed in the third quarter of fiscal 2023, thereby expanding profit margins and leveraging the growing demand for EV buses. BLBD’s efforts to enhance operations, increase production efficiency, boost new order growth and strengthen leadership in alternative-powered buses have yielded results. From a loss of $11 million in the first quarter of fiscal 2023, Blue Bird has significantly improved, reporting a profit of $26 million in the last reported quarter.
Expansion & Safety Initiatives: On the last earnings call in May, BLBD stated its intention to double capital expenditure in order to expand manufacturing capacity. The company aims to ramp up production to 50 new buses per day to meet the rising demand. Beyond capacity expansion, the company is prioritizing enhancements in bus safety features, investing in supply chain capabilities and modernizing production facilities.
Raised FY24 Guidance: Significant improvements in pricing, EV mix and parts sales resulted in record results for the first half of fiscal 2024, prompting Blue Bird to raise its forecasts for the year. It expects fiscal 2024 revenues in the band of $1.27-$1.32 billion, up from $1.15-$1.25 billion guided earlier, as well as $1.13 billion recorded in fiscal 2023. Adjusted EBITDA is now envisioned to be between $145 million and $165 million, higher than the prior projection of $120-$140 million and $88 million generated in fiscal 2023.
Stock Performance & Valuation
Year to date, shares of Blue Bird have rallied roughly 94%, handily outperforming the industry, sector and S&P 500.
YTD Price Performance
Image Source: Zacks Investment Research
Competitors like Lion Electric (LEV - Free Report) witnessed a drop of 44% on a year-to-date basis. EV pioneer Tesla (TSLA - Free Report) has just moved up around 3% during the same time period.
From a valuation standpoint, BLBD is trading at a forward 12-month sales multiple of 1.15, higher than its 5-year median but lower than the industry’s 1.53. The company has a Value Score of B.
Image Source: Zacks Investment Research
Growth Estimates & Revision Trends
Arguably, nothing is more important than earnings growth, as surging profit levels are what most investors are after. The Zacks Consensus Estimate for fiscal 2024 EPS implies a year-over-year uptick of 155%.
The estimate revision trend for its current fiscal year has been notably bullish, up 90.9% to $2.73 per share over the last year. Estimate revisions for the next fiscal are also favorable.
Image Source: Zacks Investment Research
What Should Investors Do Now?
The company's turnaround has evolved into a growth narrative. With a robust market demand and an order backlog of approximately 5,900 units valued at around $850 million, Blue Bird is experiencing notable growth. The company exited the second quarter of fiscal 2024 with nearly 500 electric orders in its backlog. Initiatives like product enhancements for EVs, new safety features, complexity reduction and quality improvements are contributing to its success.
However, reliance on subsidies and grants poses a risk, potentially impacting future growth if government support diminishes. The company's efforts to diversify sales beyond EPA initiatives, particularly through its joint venture with Generate Capital, are promising. Still, investors need to monitor the progress and watch out for more non-EPA orders.
Despite these considerations, BLBD's improved financial performance, manageable debt and strategic alignment with market demands suggest a positive outlook. Investors should consider keeping an eye on BLBD for more gains in the near future, especially given the positive earnings revisions and technical strength observed in the stock.
Existing shareholders should hold onto the stock, while new investors may consider adding BLBD to their watchlist and initiating positions during market dips.
BLBD currently carries a Zacks Rank #3 (Hold) and has a VGM Score of A. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.