Yahoo Finance The 9.5% return this week takes Bombardier's (TSE:BBD.B) shareholders three-year gains to 306%
Bombardier Inc. (TSE:BBD.B) shareholders might be concerned after seeing the share price drop 14% in the last quarter. But that doesn't change the fact that the returns over the last three years have been spectacular. In fact, the share price has taken off in that time, up 306%. So the recent fall doesn't do much to dampen our respect for the business. The only way to form a view of whether the current price is justified is to consider the merits of the business itself.
Since the stock has added CA$484m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.
View our latest analysis for Bombardier
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
Bombardier became profitable within the last three years. Given the importance of this milestone, it's not overly surprising that the share price has increased strongly.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
It is of course excellent to see how Bombardier has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Bombardier stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
It's nice to see that Bombardier shareholders have received a total shareholder return of 98% over the last year. There's no doubt those recent returns are much better than the TSR loss of 9% per year over five years. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It's always interesting to track share price performance over the longer term. But to understand Bombardier better, we need to consider many other factors. For instance, we've identified 2 warning signs for Bombardier that you should be aware of.
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Canadian exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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