Bombardier, Canadian National Railway & Canadian Pacific Railway: 3 Trending Industrial Stocks

Summary

• Bombardier Inc. (TSX: BBD.B) has been on a steady decline since March 19. The stock is down by 84.71 per cent this year.
• Canadian Pacific Railway (TSX: CP) reports 6 per cent revenue decrease to C$1.86 billion in Q3 2020.
• In the seven months post lockdown, the Canadian National Railway Company (TSX: CNR) moved 2.88 million metric tons of Canadian grain in October 2019 to achieve its unattained target of 3 MMT.

Now that the economy is slowly rebounding amid the pandemic, industrial stocks are picking up. Manufacturing has resumed in sync with the demands of the new normal, resetting production levels and delivery schedules. Here are three industrial stocks trending on the Toronto Stock Exchange: Bombardier Inc. (TSX: BBD.B), Canadian National Railway Company (TSX: CNR) and Canadian Pacific Railway Limited (TSX: CP).

Bombardier Inc. (TSX: BBD.B)

Current Stock Price: C$0.295

Bombardier Inc. is among the world leaders in transportation solutions from business jets to commercial aircrafts, rail transportation equipment and many other services. The company has 63 production and engineering sites in more than 25 countries. The company sold its aerostructure business to Spirit AeroSystems Holding, Inc, with the transaction deal closing on October 30, 2020 for a total transaction value of approximately US$1.2 billion.

As travel restrictions continue and people are working-from-home, the transportation, logistics and aviation sector has been worst hit by the unprecedented crisis.

The stock down 84.71 per cent this year. Current market capitalization of the firm is C$627.78 million. The stock holds profit-to-cash flow (P/CF) ratio of 12.40. Positive return on equity (RoE) is 32.27 per cent. The company will be announcing its third quarter financial results for the period ended September 30, 2020 on November 5.

Aiming to become a pure-play business jet company, Bombardier Inc launched its new business jet portfolio, the Learjet 75 Liberty light jet, on October 6. Earlier this year, the company also inked a revised deal with French company Alstom SA to sell its train division for US$350 million.

BBD.B FINANCIALS

As per financials for the second quarter (period ended June 30, 2020), the company’s revenues fell from C$4.3 billion in Q2 2019 to C$2.7 billion in Q2 2020, down by 37 per cent year-over-year (YoY). The revenue drop was due to pandemic triggered suspension of operations and deliveries. The cash flow from operating activities declined by 231 per cent, from loss of US$ 289 million in Q2 2019 to US$ 957 million in Q2 2020. The net loss of the company stood at US$223 million in Q2 2020.

Canadian Pacific Railway Limited (TSX: CP)

Current Stock Price: C$415.00

Canadian Pacific’s 12,500 miles transcontinental railway network connects across whole of Canada and the United States.

The stock gained 25.37 per cent YTD, up from C$331.03 at the beginning of the year. The company’s current market capitalization stood at C$55.81 billion. Earnings per share is C$16.92. The stock holds P/E ratio of 23.50, P/B ratio of 7.365 and P/CF ratio of 19.10. Positive return on equity (RoE) and return on assets (RoA) at 29.99 per cent and 9.58 per cent.

Quarterly dividend payout of C$0.95 is declared with a dividend yield of 0.916 per cent.

CP FINANCIALS

Third quarter financial results for the period ended September 30, 2020, the company’s revenues decreased by 6 per cent from C$1.98 billion last year to C$1.86 billion in Q3 2020. The diluted earnings per share (EPS) decreased by 1 per cent from C$4.46 last year to C$4.41 in the third quarter.

The operating income declined by 10 per cent to C$779 million in Q3 2020, from C$869 million in Q3 2019. Net income decreased from C$618 million in Q3 2019 to C$598 million in Q3 2020, a decrease by 3 per cent from last year. Total operating expenses decreased by 2 per cent, from C$1,110 million in Q3 2019, to C$1,084 million in Q3 2020. The company generated free cash of C$6 million in the third quarter of 2020, a decrease of C$357 million, or 98 per cent from C$363 million in Q3 2019. This decrease was observed because of decrease in cash provided by operating activities.

Canadian National Railway Company (TSX: CNR)

Current Stock Price: C$135.59

Canadian National Railway Company enables trade and transportation across Canada, connecting the west and east, extending through Chicago to the Gulf of Mexico through a 19,500-mile railroad network. The company transports more than 300 million tons of manufactured products, natural and finished goods to serve North American markets with a commitment to sustainable trade since 1919.

Its network connects ports on all the three coasts to move raw materials and finished goods to markets across Canada. In the seven months post lockdown, the company moved 2.88 million metric tons of Canadian grain in October 2019 and is set to achieve its unattained target of 3 MMT.

The stock gained 15.42 per cent YTD. Earnings per share is C$4.80. The stock holds profit-to-equity (P/E) ratio of 27.60, profit-to-book (P/B) ratio of 4.987 and profit-to-cash flow (P/CF) of 16.70. The company offers positive return on equity (RoE) and return on assets (RoA) at 17.37 per cent and 7.35 per cent. Quarterly dividend of C$0.575 is declared by the company with a dividend yield of 1.696 per cent.

CNR FINANCIALS

Third quarter revenues for the period ended September 30, 2020 show decrease in total revenue by 11 per cent or C$421 million to C$3,409 million, as compared to C$3,830 million in the same period last year.

Operating income decreased by 15 per cent to C$ 1,366 million, as compared to C$1,613 million in Q3 2019. Free Cash Flow (FCF) as of September 30, 2020 for the nine months of the year stood at C$2,087 million, an increase of C$588 million as compared to same quarter last year. Free Cash Flow for three months ended September 30, stood at C$506 million, as compared to C$700 million in Q3 2019. Operating expenses in Q3 2020 decreased by 8 per cent to C$2,043 million mainly due to fuel and labor costs, but decreased material expenses and purchase services.