Why Are Industrial Stocks Bombardier & Canadian National Railway Trending?

Summary

• Bombardier Inc stocks climbed nearly 75 per cent in the month of November.
• Bombardier Inc posted total revenues of US$ 3.5 billion in Q3 of 2020, down five per cent year-on-year.
• After the coronavirus pandemic-led market crash in March, Canadian National Railway stocks climbed over 19 per cent in the last six months.
• Canadian National Railway’s revenues dwindled by 11 per cent year-on-year (YoY) in the third quarter of 2020, amounting to C$ 3.4 billion.

Industrial stocks suffered quite a setback this year due to the pandemic as investors turned to safe assets amid the crisis. However, stocks of Bombardier Inc (TSX: BBD.B) and Canadian National Railway (TSX: CNR) are currently trending high on the Toronto Stock Exchange with increased average trading volume.

The rise in the popularity of these industrial stocks comes in the wake of the  successful coronavirus vaccine trials. Let’s take a closer look at these trending stocks and their recent performances.

Bombardier Inc (TSX: BBD.B)

Current Stock Price: C$ 0.495

While the pandemic did quite a number on the company, the Canadian transportation equipment maker was already knee deep in debt before the pandemic. But after a series of asset sales, cost control initiatives and new deals, Bombardier Inc’s business has made some recovery so far.

The company’s joint venture Bombardier Sifang (Qingdao) Transportation Ltd managed to bag a contract of US$ 248 million from the China State Railway Group Co recently. The deal requires Bombardier Inc to deliver 112 CR300AF high-speed train cars by January. Bombardier Inc is also set to build a customer service base in Germany’s Berlin by next year and close Lufthansa Bombardier Aviation Services’ (LBAS) acquisition. 

BOMBARDIER INC STOCK PERFORMANCE

Stocks of Bombardier Inc are currently trending high on the TSX, with an average share trading volume of 11.7 million for the last 10 days and that of 7.1 million for the last one month.

Bombardier Inc stocks are down almost 77 per cent this year. However, the scrips have been picking up lately, having climbed nearly 75 per cent in the month of November. The shares dropped about six per cent in the last six months and almost 21 per cent in the last three months. 

BOMBARDIER INC Q3 2020 RESULTS

Bombardier Inc posted total revenues of US$ 3.5 billion in the third quarter of 2020, down five per cent year-over-year. However, the Montreal-based company’s business aircraft manufacturing revenues saw a YoY increase of 20 per cent, amounting to US$ 1.4 billion in Q3 2020. 

Bombardier Inc’s free cash flow usage was US$ 0.7 billion, and its operating cash flow usage was US$ 0.6 billion at the end of September. 

The company’s cash on hand by the end of the third quarter stood at about US$ 1.9 billion. It also collected about US$ 275 million from the deal selling of its aerostructures segment to Wichita-based Spirit AeroSystems Holding Inc. The total transaction value, meanwhile, stood at US$ 1.2 billion.

Once its deal to sell its train manufacturing wing to French company Alstom SA goes through, which is expected to close by the first quarter of 2021, Bombardier Inc will become solely a business aircraft company.

Canadian National Railway Company (TSX: CNR)

Current Stock Price: C$135.59

Stocks of Canadian National Railway Company have risen by about 20 per cent this year. Currently trending high on the TSX, the stocks have an average movement volume of 1.3 million for the last 10 days and that of 1.2 million for the past month.

After the coronavirus pandemic-led market crash in March, Canadian National Railway scrips have climbed over 19 per cent in the last six months. In the month of November, shares of Canadian National Railway registered a growth of about seven per cent.

Canadian National Railway currently has a price-to-earnings (P/E) ratio of 29.5, price-to-book (P/B) ratio of 5.2 and price-to-cash flow (P/CF) ratio of 17.8, as per the data available on the TMX Group website.

Its return on equity (RoE) stands at 17.37 per cent and its return on assets (RoA) is 7.35 per cent. The company also offers a quarterly dividend of C$ 0.575, which currently has a dividend yield of 1.625 per cent. 

CANADIAN NATIONAL RAILWAY Q3 2020 RESULTS

Canadian National Railway’s revenues dwindled by 11 per cent Y-o-Y) in the third quarter of 2020, amounting to C$ 3.4 billion. Its operating income of C$ 1.3 billion in Q3 2020 also recorded a decrease of 15 per cent YoY from that of C$ 1.6 billion in Q3 2019. 

The company’s free cash flow stood at C$ 506 million for the three months ending 30 September, down from C$ 700 million in Q3 2019. The company’s operating expenses stood at C$ 2 billion in Q3 2020.