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BLBD Stock Up 55% in a Year: Still Worth Buying at Current Levels?
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Blue Bird Corp. (BLBD - Free Report) — one of the leading school bus manufacturers in the United States — is enjoying a solid run on the bourses. Over the past year, the stock has rallied more than 55%, outperforming the auto sector and the S&P 500.
Apart from its diesel-powered buses, Blue Bird is actively focused on innovative automotive technologies, including alternative fuels like propane and gasoline, as well as electric-powered buses. The company has greatly benefited from the U.S. government’s push to transition more public schools to EV buses and other non-fossil fuel offerings.
But now, with Donald Trump’s return to the White House, questions linger about whether Blue Bird’s prospects remain solid. After such a remarkable rally, is BLBD still worth buying at current levels, or is it time to lock in profits? Let’s explore.
One-Year Price Performance
Image Source: Zacks Investment Research
Fiscal 2024: A Banner Year for BLBD
BLBD’s efforts to enhance operations, increase production efficiency, boost order growth and strengthen leadership in alternative-powered buses have yielded results.
Its fiscal 2024 (ended Sept. 28, 2024) was nothing short of spectacular. The company sold 9,000 buses, a 6% increase compared to the prior year. More importantly, the average selling price per bus climbed 14%, thanks to strategic pricing and a richer product mix. This drove a remarkable 19% increase in sales revenues, which reached a record-breaking $1.35 billion. Even more impressive was the fact that adjusted EBITDA more than doubled to $183 million, resulting in margin expansion to 13.6% from 7.6% in fiscal 2023.
Notably, Blue Bird’s free cash flow surged to $99 million, exceeding its target of 50% of EBITDA. Additionally, net orders for fiscal 2024 were up 16% year over year, signaling robust market demand. The company’s backlog of 4,800 units at the end of the fiscal year — 6% higher than the previous year — bodes well for production stability and future profitability.
Electric Revolution: Blue Bird’s Competitive Edge
Blue Bird is not just a traditional bus manufacturer. It’s a pioneer in alternative fuel and electric-powered school buses. With over 90% of school buses in the United States still running on diesel, there’s immense growth potential for cleaner alternatives. The company has already delivered 2,000 electric school buses powered by Cummins’ (CMI - Free Report) advanced PowerDrive systems. Blue Bird’s extended partnership with Ford (F - Free Report) and ROUSH CleanTech until 2030 solidifies its leadership in low-emission student transportation.
The U.S. Department of Energy awarded the company an $80 million grant to develop a new 600,000-square-foot manufacturing facility. This expansion will significantly boost production capacity, enabling Blue Bird to meet increasing demand for zero-emission buses. Additionally, the EPA’s $5 billion Clean School Bus Program (FY 2022-2026) presents a golden opportunity for the company to capture market share in the electric bus segment.
Strong Outlook for BLBD in FY25 and Beyond
Blue Bird’s guidance for fiscal 2025 points to another record-breaking year. The company expects net revenues between $1.4 billion and $1.5 billion, with adjusted EBITDA ranging from $190 million to $210 million. Even after accounting for $50 million in extraordinary capital expenditures for the new manufacturing plant, free cash flow is projected in the range of $40 million to $60 million.
The Zacks Consensus Estimate for fiscal 2025 revenues and EPS implies year-over-year growth of 11% and 12%, respectively.
Blue Bird aims to achieve a 14% EBITDA margin by fiscal 2026-2027, with annual revenues reaching $1.6 billion. By 2028, the company targets revenues of $1.85 billion to $2 billion, driven by production volumes of 11,000 to 12,000 units, including 4,000 to 5,000 electric buses. Adjusted EBITDA is projected to climb to the range of $270 million-$300 million, with industry-leading margins of 14.5% to 15%. Thanks to its disciplined cost management and refined manufacturing processes, management expects to achieve these EBITDA margin targets.
Challenges on the Path of BLBD
Despite its strong fundamentals, Blue Bird faces challenges. Supply chain constraints, labor issues and seasonal demand fluctuations remain risks.
And more importantly, policy uncertainty could arise with a potential shift in EPA funding under a new presidential administration. We know Trump’s unfriendly stance on EVs. Just on his first day in office, Trump revoked Biden’s EV targets and halted the disbursement of unspent funds earmarked for EV charging infrastructure. Elimination of EV tax credits is also in the cards. On his campaign trail, Trump had consistently advocated for reducing regulations on the fossil fuel industry to “unlock American energy” while eliminating subsidies for EVs. He had cleared his stance that while he is not against EVs per se, he is certainly against funding expensive subsidies for them.
BLBD’s Valuation: Still Attractive?
From a valuation perspective, BLBD is trading at a forward 12-month sales multiple of 0.9. This is not only lower than the industry’s 2.43 but also 30% below the stock’s five-year high. The company’s Value Score of “A” underscores its attractiveness, suggesting that the stock remains reasonably priced despite its significant rally.
Image Source: Zacks Investment Research
BLBD Shares: Should You Buy, Hold, or Sell?
Blue Bird’s impressive performance in fiscal 2024, coupled with strong growth prospects, makes it a compelling investment. The company’s leadership in alternative fuel and electric school buses positions it well to capitalize on the ongoing transition to cleaner transportation solutions. While risks like policy changes and operational challenges exist, Blue Bird’s track record of execution and robust financial health mitigate these concerns. BLBD’s balance sheet is strong, with $127 million in cash against $90 million in long-term debt. Its disciplined approach to cost management further strengthens its resilience.
For investors, the decision boils down to perspective. If you’ve held the stock during its 55% rally, it’s understandable to consider booking profits. However, given the company’s strong fundamentals, attractive valuation and promising outlook, there’s a case to be made for holding or even accumulating more shares.
Wall Street seems to be bullish on BLBD. Out of the seven analysts covering the stock, five rate it as a "Strong Buy," one as a "Buy" and one as a "Hold," resulting in an attractive average broker rating (ABR) of 1.43. The consensus price target of $59.64/share suggests a 42% upside for the stock from the current levels.
Image: Bigstock
BLBD Stock Up 55% in a Year: Still Worth Buying at Current Levels?
Blue Bird Corp. (BLBD - Free Report) — one of the leading school bus manufacturers in the United States — is enjoying a solid run on the bourses. Over the past year, the stock has rallied more than 55%, outperforming the auto sector and the S&P 500.
Apart from its diesel-powered buses, Blue Bird is actively focused on innovative automotive technologies, including alternative fuels like propane and gasoline, as well as electric-powered buses. The company has greatly benefited from the U.S. government’s push to transition more public schools to EV buses and other non-fossil fuel offerings.
But now, with Donald Trump’s return to the White House, questions linger about whether Blue Bird’s prospects remain solid. After such a remarkable rally, is BLBD still worth buying at current levels, or is it time to lock in profits? Let’s explore.
One-Year Price Performance
Fiscal 2024: A Banner Year for BLBD
BLBD’s efforts to enhance operations, increase production efficiency, boost order growth and strengthen leadership in alternative-powered buses have yielded results.
Its fiscal 2024 (ended Sept. 28, 2024) was nothing short of spectacular. The company sold 9,000 buses, a 6% increase compared to the prior year. More importantly, the average selling price per bus climbed 14%, thanks to strategic pricing and a richer product mix. This drove a remarkable 19% increase in sales revenues, which reached a record-breaking $1.35 billion. Even more impressive was the fact that adjusted EBITDA more than doubled to $183 million, resulting in margin expansion to 13.6% from 7.6% in fiscal 2023.
Notably, Blue Bird’s free cash flow surged to $99 million, exceeding its target of 50% of EBITDA. Additionally, net orders for fiscal 2024 were up 16% year over year, signaling robust market demand. The company’s backlog of 4,800 units at the end of the fiscal year — 6% higher than the previous year — bodes well for production stability and future profitability.
Electric Revolution: Blue Bird’s Competitive Edge
Blue Bird is not just a traditional bus manufacturer. It’s a pioneer in alternative fuel and electric-powered school buses. With over 90% of school buses in the United States still running on diesel, there’s immense growth potential for cleaner alternatives. The company has already delivered 2,000 electric school buses powered by Cummins’ (CMI - Free Report) advanced PowerDrive systems. Blue Bird’s extended partnership with Ford (F - Free Report) and ROUSH CleanTech until 2030 solidifies its leadership in low-emission student transportation.
The U.S. Department of Energy awarded the company an $80 million grant to develop a new 600,000-square-foot manufacturing facility. This expansion will significantly boost production capacity, enabling Blue Bird to meet increasing demand for zero-emission buses. Additionally, the EPA’s $5 billion Clean School Bus Program (FY 2022-2026) presents a golden opportunity for the company to capture market share in the electric bus segment.
Strong Outlook for BLBD in FY25 and Beyond
Blue Bird’s guidance for fiscal 2025 points to another record-breaking year. The company expects net revenues between $1.4 billion and $1.5 billion, with adjusted EBITDA ranging from $190 million to $210 million. Even after accounting for $50 million in extraordinary capital expenditures for the new manufacturing plant, free cash flow is projected in the range of $40 million to $60 million.
The Zacks Consensus Estimate for fiscal 2025 revenues and EPS implies year-over-year growth of 11% and 12%, respectively.
Blue Bird aims to achieve a 14% EBITDA margin by fiscal 2026-2027, with annual revenues reaching $1.6 billion. By 2028, the company targets revenues of $1.85 billion to $2 billion, driven by production volumes of 11,000 to 12,000 units, including 4,000 to 5,000 electric buses. Adjusted EBITDA is projected to climb to the range of $270 million-$300 million, with industry-leading margins of 14.5% to 15%. Thanks to its disciplined cost management and refined manufacturing processes, management expects to achieve these EBITDA margin targets.
Challenges on the Path of BLBD
Despite its strong fundamentals, Blue Bird faces challenges. Supply chain constraints, labor issues and seasonal demand fluctuations remain risks.
And more importantly, policy uncertainty could arise with a potential shift in EPA funding under a new presidential administration. We know Trump’s unfriendly stance on EVs. Just on his first day in office, Trump revoked Biden’s EV targets and halted the disbursement of unspent funds earmarked for EV charging infrastructure. Elimination of EV tax credits is also in the cards. On his campaign trail, Trump had consistently advocated for reducing regulations on the fossil fuel industry to “unlock American energy” while eliminating subsidies for EVs. He had cleared his stance that while he is not against EVs per se, he is certainly against funding expensive subsidies for them.
BLBD’s Valuation: Still Attractive?
From a valuation perspective, BLBD is trading at a forward 12-month sales multiple of 0.9. This is not only lower than the industry’s 2.43 but also 30% below the stock’s five-year high. The company’s Value Score of “A” underscores its attractiveness, suggesting that the stock remains reasonably priced despite its significant rally.
Image Source: Zacks Investment Research
BLBD Shares: Should You Buy, Hold, or Sell?
Blue Bird’s impressive performance in fiscal 2024, coupled with strong growth prospects, makes it a compelling investment. The company’s leadership in alternative fuel and electric school buses positions it well to capitalize on the ongoing transition to cleaner transportation solutions. While risks like policy changes and operational challenges exist, Blue Bird’s track record of execution and robust financial health mitigate these concerns. BLBD’s balance sheet is strong, with $127 million in cash against $90 million in long-term debt. Its disciplined approach to cost management further strengthens its resilience.
For investors, the decision boils down to perspective. If you’ve held the stock during its 55% rally, it’s understandable to consider booking profits. However, given the company’s strong fundamentals, attractive valuation and promising outlook, there’s a case to be made for holding or even accumulating more shares.
Wall Street seems to be bullish on BLBD. Out of the seven analysts covering the stock, five rate it as a "Strong Buy," one as a "Buy" and one as a "Hold," resulting in an attractive average broker rating (ABR) of 1.43. The consensus price target of $59.64/share suggests a 42% upside for the stock from the current levels.
Image Source: Zacks Investment Research
BLBD stock sports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.