Why Bombardier (BBD) Stocks Are Soaring & Air Canada (AC) Drowning?

Source: BlueBarronPhoto, Shutterstock

Stocks of Bombardier Inc. (TSX: BBD.B) surged over 10.66 per cent on Monday, March 22, and it was also the most active stock on the Toronto Stock Exchange with a one-day volume of 16.51 million.

The aircraft manufacturer’s stock could extend its price rally today as it announced to offer cash tender for its outstanding senior notes worth C$ 1.1 billion.

Meanwhile, Air Canada (TSX: AC) stock headed south with a loss of nearly 3.5 per cent yesterday. Reasons behind this reverse movement could be extended bailout talks with the federal government and parked airplanes.

Let us delve into these two industrial stocks’ performances:

Air Canada (TSX: AC)

The airline stock is down by 10.33 per cent in the past one week after 75 per cent of its fleet were suspended due to COVID-related regulations. However, it has recovered by nearly 119 per cent from its 52-week low of C$ 12.21 per share (plunged on March 23, 2020).

It has increased approximately 17.35 per cent this year, overtaking the Toronto Stock Exchange 300 Composite Index that has relatively risen 8.73 per cent year-to-date (YTD). Its current price is 26.7 per share.  

Air Canada’s share price has improved by around 62 per cent in the last six months, and its average volume is 5 million for the past 50 days.

Air Canada's Year-To-Date Stock Performance Chart/ (Source: Refinitiv)

After posting financial losses worth C$ 4.647 billion in 2020, the airline has been putting continuous efforts to generate revenues via its cargo operations and cost-cutting via laying off its staff members.

As Canadians resume traveling in the post-COVID world, the C$ 9-billion national aircraft has the potential to recover. Air Canada must be planning to work with full-capacity and retain its net income, but it could take three to four years.

Bombardier Inc. (TSX: BBD.B)

This industrial share has gained over 48 per cent month-to-date (MTD). It has garnered nearly 73 per cent YTD, beating the benchmark index that is relatively up almost 60 per cent this year.

The stock recorded a new 52-week high of C$ 0.84 per piece on Monday, up against the previous high of 0.790 per share. The industrial stock has been actively trading with a 50-day average volume of 9.20 million shares. It also delivers a return on equity of 9.92 per cent.

It has rebounded by more than 219 per cent from its 52-week low of 0.260 per share (slumped on October 30, 2020).

Bombardier's Year-To-Date Stock Performance Chart. (Source: Refinitiv)

In the fourth quarter of 2020, the aircraft manufacturer delivered 44 carriers and posted revenues of US$ 5.6 billion, an increase of 3 per cent year-over-year (YoY).

In its 2021 guidance, Bombardier expects higher business aircraft revenues than 2020 on the back of gradual recovery from the COVID-19 meltdown.


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