Analysts have raised their fair value estimate for Blue Bird from $59.13 to $62.38, citing continued improvements in gross margins and strong management execution. These factors are driving better performance prospects.

Analyst Commentary

Recent analyst updates highlight both the optimism surrounding Blue Bird’s performance as well as areas of caution, with price targets being lifted and attention turning to management execution and margin growth.

• Bullish analysts point to the significant increase in gross margins, which have risen by approximately 240 basis points over the trailing-12-month period. This is seen as a primary driver behind higher fair value assessments.
• Recent stock performance has been strong, with shares climbing around 30% following an earnings beat and raised guidance earlier this year.
• Management’s effective cost controls and revenue execution are viewed as evidence that the company can sustain higher levels of profitability moving forward.
• Higher delivery volumes and firmer average sales prices provide a supportive backdrop for additional margin improvement and potential valuation expansion.

• Bearish analysts remain cautious about whether the recent pace of margin expansion is sustainable in a more challenging market environment.
• There is concern that strong execution and elevated earnings may be at risk if macroeconomic factors weigh on demand or impact pricing power.
• Future valuation increases may depend on Blue Bird’s ability to consistently capitalize on operating efficiencies and defend its guidance amid changing industry conditions.

What's in the News

• Blue Bird Corporation announced a $100 million share repurchase program, to be carried out through January 1, 2028. (Buyback Transaction Announcements)
• Little Rock School District in Arkansas is receiving 25 new Blue Bird electric school buses. This purchase is funded in part by a nearly $10 million EPA Clean School Bus Program grant. These zero-emission buses are expected to reduce operating expenses and environmental impact. (Client Announcements)
• Guilford County Schools purchased 10 propane-powered Blue Bird Vision school buses, supporting clean transportation efforts and lowering fuel and maintenance costs. (Client Announcements)
• Micro Bird USA LLC, a joint venture with Blue Bird, opened a major manufacturing facility in Plattsburgh, NY. This expansion creates new jobs and strengthens U.S. manufacturing capacity. (Business Expansions)
• Central States Bus Sales, Blue Bird’s largest authorized dealer, opened a 15,000 square-foot Sales, Parts and Service Center in Alabama, adding approximately 20 new jobs to the community. (Client Announcements)

Valuation Changes

• The Fair Value Estimate has increased from $59.13 to $62.38, reflecting improved expectations for the company's future performance.
• The Discount Rate has risen slightly from 8.04% to 8.26%, indicating a marginally higher required rate of return by analysts.
• The Revenue Growth Projection remains essentially unchanged, holding steady at approximately 4.59%.
• The Net Profit Margin remains stable at around 9.33%, with only an immaterial adjustment to the estimate.
• The Future P/E Ratio has increased from 14.75x to 15.65x, pointing to market expectations of higher future earnings or growth potential.