The 60 to 150 seat segment will be a catalyst to further growth, market penetration and airline profitability for Bombardier Inc. (TSE:BBD.B)
SmallCapPower | September 13, 2017: Bombardier Inc. (TSX: BBD.B) Tuesday released its 20-year market forecast for the 60 to 150 seat segment. According to this new 2017-2036 market forecast, the 60 to 150 seat segment will be a catalyst to further growth, market penetration and airline profitability.
Related: Bombardier (TSX: BBD.B) Stock: Is it Worth the Risk?
The complete market is seen as 12,550 aircraft worth US$820 billion, based on 2017 list prices. The 100 to 150 seat segment will represent 70% of the revenues, 6,800 aircraft valued at US$580 billion, followed by the 60 to 100 seat segment with 5,750 deliveries worth US$240 billion.
Globally there is a weak demand for big planes but strong demand for small planes. The situation becomes clearer when global demographic trends are considered. Emerging market economies such as China and India have rapidly expanding middle classes. This has led to an explosion in regional air traffic between the different cities within these markets. Air travel is a luxury that is becoming affordable to more and more people across the developing world, not just international travelers from wealthier nations. This market opportunity can be seen as positive boost and which can drive Bombardier’s bottom line growth going forward.
Shares of Bombardier have climbed about 28% over the past year to its current price of $2.44.
Currently Bombardier stock trades at TTM price to sales value of 0.34x and forward PE of 30.25x.
Disclosure: Neither the author nor any of the principals at SmallCapPower, or their family members, own shares in the company mentioned above.
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