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BLBD Stock Soars to Become Top Automaker YTD: Is It Still a Smart Buy?
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Blue Bird Corporation (BLBD - Free Report) —a school bus manufacturer that’s been in business for roughly 100 years — is having an amazing run on the bourses, outperforming the industry, sector and the S&P 500. In fact, BLBD has emerged as the best-performing auto manufacturer on a year-to-date basis.
The company has pushed forward into new areas of automotive technology, including alternative fuel and electric vehicle (EV) buses. It is benefiting from the U.S. government’s push to transition more public schools to EV buses and other non-fossil fuel offerings.
With the stock surging 80% year to date, investors might be wondering whether there's still room for further growth or if the potential gains have already been fully priced in. So, should you invest in the stock at current levels or book profits?
YTD Price Performance
Image Source: Zacks Investment Research
Blue Bird Riding on Market Opportunity & Federal Grants
The United States is experiencing a surge in electric school bus adoption, driven by unprecedented government funding aimed at replacing diesel fleets. The Bipartisan Infrastructure Law supports the Environmental Protection Agency’s (EPA) Clean School Bus Program, offering $5 billion for five years (FY 2022-2026) for zero-emission bus replacements. So far, the EPA has awarded around $3 billion to replace 8,500 buses across 1,000 schools. With roughly 90% of U.S. school buses still diesel-powered, Blue Bird is well-positioned to capitalize on this vast market opportunity, benefiting from favorable government policies and growing demand.
To meet the increasing demand for zero-emissions buses, it is focusing on capacity expansion. Last year, it opened an EV Build-up Center in Georgia. This July, it secured an $80 million DOE grant to convert a facility into an EV manufacturing plant. These initiatives will enable the company to boost its long-term output capacity to support the company’s goal to produce more than 5,000 electric buses annually.
Besides battery electric buses, BLBD also utilizes gasoline and propane as alternative fuels, with propane being EPA-funded and recognized for ultra-low emissions. In May, it extended its exclusive partnership with Ford (F - Free Report) and Roush CleanTech to 2030, reinforcing its leadership in low-emission student transportation.
Late last month, Blue Bird hit a milestone, delivering its 2,000th electric school bus, powered by Cummins' (CMI - Free Report) PowerDrive 7000 system.
BLBD’s Blowout Q3 Results & Rosy Outlook
Blue Bird posted impressive fiscal third-quarter 2024 results in early August, citing increased demand for school buses and EV models. Both earnings and revenues exceeded expectations. Adjusted EBITDA hit a record $48 million with a 14.5% margin. The company closed the quarter with a 5,200-unit backlog, helping it raise its earnings outlook significantly. It now expects fiscal 2024 revenues in the band of $1.30-1.33 billion, up from $1.27-$1.32 billion guided earlier. Adjusted EBITDA is now envisioned to be between $170 million and 180 million, higher than the prior projection of $145 million and $165 million. The company has also raised its long-term profit outlook and aims to achieve an adjusted EBITDA margin of 15% on roughly $2 billion in revenues.
BLBD’s efforts to enhance operations, increase production efficiency, boost new order growth and strengthen leadership in alternative-powered buses are yielding results. Blue Bird roared back in a big way after the pandemic crushed its business, posting 17% and 42% revenue growth in fiscal 2022 and 2023, respectively. The Zacks Consensus Estimate for fiscal 2024 and 2025 sales implies a year-over-year uptick of 18% and 12%, respectively. The consensus mark for current and next fiscal EPS estimates suggests growth of 216% and 10%, respectively.
How Should You Play BLBD Stock Now?
If you are thinking of selling Blue Bird shares as it has returned stellar returns year to date, better to reconsider. We are positive about the company’s prospects and believe that it is poised to carry the momentum ahead. BLBD stock sports a Zacks Rank #1 (Strong Buy).
From a valuation standpoint, BLBD is trading at a forward 12-month sales multiple of 1.06, lower than the industry’s 1.65 as well as 18% below its 5-year high. The company has a Value Score of B.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for fiscal 2024 and 2025 EPS has moved up by 65 cents and 80 cents, respectively, over the past 60 days.
Wall Street understands BLBD’s bull case, as six of the seven brokers covering BLBD stock have ‘Strong Buy’ recommendations, giving the company an attractive ABR of 1.14. The Zacks average price target of $57/share suggests a 17% upside for the stock from the current levels.
Image Source: Zacks Investment Research
So, don’t be tempted to cash out gains in BLBD stock. Instead, given the strong fundamentals and attractive valuation, consider accumulating more shares of Blue Bird for greater returns in the future.
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BLBD Stock Soars to Become Top Automaker YTD: Is It Still a Smart Buy?
Blue Bird Corporation (BLBD - Free Report) —a school bus manufacturer that’s been in business for roughly 100 years — is having an amazing run on the bourses, outperforming the industry, sector and the S&P 500. In fact, BLBD has emerged as the best-performing auto manufacturer on a year-to-date basis.
The company has pushed forward into new areas of automotive technology, including alternative fuel and electric vehicle (EV) buses. It is benefiting from the U.S. government’s push to transition more public schools to EV buses and other non-fossil fuel offerings.
With the stock surging 80% year to date, investors might be wondering whether there's still room for further growth or if the potential gains have already been fully priced in. So, should you invest in the stock at current levels or book profits?
YTD Price Performance
Blue Bird Riding on Market Opportunity & Federal Grants
The United States is experiencing a surge in electric school bus adoption, driven by unprecedented government funding aimed at replacing diesel fleets. The Bipartisan Infrastructure Law supports the Environmental Protection Agency’s (EPA) Clean School Bus Program, offering $5 billion for five years (FY 2022-2026) for zero-emission bus replacements. So far, the EPA has awarded around $3 billion to replace 8,500 buses across 1,000 schools. With roughly 90% of U.S. school buses still diesel-powered, Blue Bird is well-positioned to capitalize on this vast market opportunity, benefiting from favorable government policies and growing demand.
To meet the increasing demand for zero-emissions buses, it is focusing on capacity expansion. Last year, it opened an EV Build-up Center in Georgia. This July, it secured an $80 million DOE grant to convert a facility into an EV manufacturing plant. These initiatives will enable the company to boost its long-term output capacity to support the company’s goal to produce more than 5,000 electric buses annually.
Besides battery electric buses, BLBD also utilizes gasoline and propane as alternative fuels, with propane being EPA-funded and recognized for ultra-low emissions. In May, it extended its exclusive partnership with Ford (F - Free Report) and Roush CleanTech to 2030, reinforcing its leadership in low-emission student transportation.
Late last month, Blue Bird hit a milestone, delivering its 2,000th electric school bus, powered by Cummins' (CMI - Free Report) PowerDrive 7000 system.
BLBD’s Blowout Q3 Results & Rosy Outlook
Blue Bird posted impressive fiscal third-quarter 2024 results in early August, citing increased demand for school buses and EV models. Both earnings and revenues exceeded expectations. Adjusted EBITDA hit a record $48 million with a 14.5% margin. The company closed the quarter with a 5,200-unit backlog, helping it raise its earnings outlook significantly. It now expects fiscal 2024 revenues in the band of $1.30-1.33 billion, up from $1.27-$1.32 billion guided earlier. Adjusted EBITDA is now envisioned to be between $170 million and 180 million, higher than the prior projection of $145 million and $165 million. The company has also raised its long-term profit outlook and aims to achieve an adjusted EBITDA margin of 15% on roughly $2 billion in revenues.
BLBD’s efforts to enhance operations, increase production efficiency, boost new order growth and strengthen leadership in alternative-powered buses are yielding results. Blue Bird roared back in a big way after the pandemic crushed its business, posting 17% and 42% revenue growth in fiscal 2022 and 2023, respectively. The Zacks Consensus Estimate for fiscal 2024 and 2025 sales implies a year-over-year uptick of 18% and 12%, respectively. The consensus mark for current and next fiscal EPS estimates suggests growth of 216% and 10%, respectively.
How Should You Play BLBD Stock Now?
If you are thinking of selling Blue Bird shares as it has returned stellar returns year to date, better to reconsider. We are positive about the company’s prospects and believe that it is poised to carry the momentum ahead. BLBD stock sports a Zacks Rank #1 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
From a valuation standpoint, BLBD is trading at a forward 12-month sales multiple of 1.06, lower than the industry’s 1.65 as well as 18% below its 5-year high. The company has a Value Score of B.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for fiscal 2024 and 2025 EPS has moved up by 65 cents and 80 cents, respectively, over the past 60 days.
Wall Street understands BLBD’s bull case, as six of the seven brokers covering BLBD stock have ‘Strong Buy’ recommendations, giving the company an attractive ABR of 1.14. The Zacks average price target of $57/share suggests a 17% upside for the stock from the current levels.
Image Source: Zacks Investment Research
So, don’t be tempted to cash out gains in BLBD stock. Instead, given the strong fundamentals and attractive valuation, consider accumulating more shares of Blue Bird for greater returns in the future.