Growing Global Wealth And Green Trends Will Boost Business Jets

Key Takeaways

• Expansion in service and defense segments, global partnerships, and large emerging market orders position Bombardier for sustained, higher-margin growth beyond current consensus.
  
• Focus on innovation, sustainability, and disciplined operations strengthens competitive advantage, enabling premium pricing and efficient scaling to capture growing industry demand.
  
• Heavy reliance on business jets, supply chain issues, and constrained innovation investment heighten Bombardier's vulnerability to industry shifts, regulatory pressures, and evolving technology trends.

Catalysts

Engages in the design, manufacture, and sale of business aircraft and aircraft structural components worldwide.

• While the analyst consensus sees Bombardier's service business growing at a mid
• to high single-digit CAGR, record-high fleet utilization, full service centers globally, and clear intent to expand into the U.S. point to the potential for accelerated double-digit service revenue growth, which could drive recurring higher-margin earnings and transform overall profitability beyond current expectations.
  
• Analysts broadly agree that Bombardier's defense business will grow substantially, but recent breakthroughs in securing international defense partnerships and strategic MOUs suggest Bombardier is set to establish itself as a key global player in specialized mission aircraft, with a likely step-change in multi-year backlog and margin expansion as new global defense needs accelerate demand for adaptable solutions.
  
• Demographic and global wealth shifts, especially in emerging markets and among high-net-worth individuals, are leading to new, sizable, and undisclosed mega fleet orders with associated long-term service contracts, providing unprecedented, multi-year revenue and cash flow visibility and potential upside from incremental large-scale orders not yet reflected in consensus models.
  
• Systematic investment in innovation-including sustainability-driven technologies, utilization of Sustainable Aviation Fuel, and upgrades enabling existing jets to match next-generation performance-is positioning Bombardier to outcompete peers, capture price premiums, and gain share among environmentally
• and performance-focused buyers, supporting both higher average selling prices and margin accretion over the long term.
  
• Bombardier's proven operational discipline post-divestiture, improved balance sheet, and strong investor support empower it to ramp production above 150 aircraft per year by 2027 and capitalize on robust demand for large-cabin and Global 8000 jets, supporting accelerated revenue growth and operating leverage as the company scales to meet a structurally growing end market.

Bombardier Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Bombardier compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Bombardier's revenue will grow by 7.9% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 5.1% today to 9.6% in 3 years time.
• The bullish analysts expect earnings to reach $1.1 billion (and earnings per share of $13.98) by about August 2028, up from $449.0 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 17.3x on those 2028 earnings, down from 27.0x today. This future PE is lower than the current PE for the CA Aerospace & Defense industry at 31.0x.
• Analysts expect the number of shares outstanding to grow by 0.34% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.66%, as per the Simply Wall St company report.

Bombardier Future Earnings Per Share Growth

Risks

• Continued supply chain disruption and late-to-line parts, despite improvements, are still causing elevated input costs that negatively affect Bombardier's margins and could lead to periodic delivery delays impacting recognized revenue in future periods.
  
• Bombardier's high leverage and ongoing focus on debt retirement constrain its flexibility to invest deeply in R&D or rapidly adapt to shifting market demands, raising the risk of losing competitiveness in the long run and ultimately limiting net earnings growth.
  
• The company's business remains heavily concentrated in the business jet segment after divesting other divisions, making Bombardier highly sensitive to potential downturns or demand shocks in private and corporate aviation which could result in significant revenue volatility.
  
• Secular trends toward stricter global decarbonization, climate regulation, and public scrutiny of private aviation may lead to higher operational costs, increased taxes or restricted usage of business jets, which could reduce overall demand and put pressure on Bombardier's long-term revenues.
  
• The industry's push toward advanced alternative propulsion technologies-such as electric or hydrogen-powered aircraft-could outpace Bombardier's current investments, putting it at risk of technological obsolescence and margin erosion if the company is slow to adapt, thereby impacting both future sales and profitability.

Valuation

• The assumed bullish price target for Bombardier is CA$201.11, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Bombardier's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$201.11, and the most bearish reporting a price target of just CA$119.82.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $11.0 billion, earnings will come to $1.1 billion, and it would be trading on a PE ratio of 17.3x, assuming you use a discount rate of 7.7%.
• Given the current share price of CA$167.9, the bullish analyst price target of CA$201.11 is 16.5% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.