A Look at Blue Bird’s (BLBD) Valuation Following Strong Earnings and New Expansion Moves

Blue Bird (BLBD) has captured plenty of attention recently with a trio of major developments. The company not only beat quarterly earnings forecasts, but also reported a striking 128% year-over-year jump in school bus orders. Along with the grand opening of the new Micro Bird manufacturing facility in Plattsburgh, New York, it is clear that Blue Bird is doubling down on its growth ambitions by expanding production capacity and moving even closer to its U.S. customer base. All these signals suggest that management is not resting on past successes, but is actively laying the groundwork for the next phase of expansion.

Against this backdrop, Blue Bird’s stock has enjoyed a notable surge, rising by 35% over the past three months and returning nearly 10% for investors in the past year. Longer-term holders have reaped even greater gains, with returns far outpacing industry averages. Operationally, Blue Bird’s high return on equity and willingness to reinvest profits have fueled expansion, while the recent expansion and positive industry feedback further bolster its momentum.

With shares climbing this year and optimism growing, the big question is whether the market is underestimating Blue Bird’s future potential or if all this progress is already reflected in the current price.

Most Popular Narrative: Fairly Valued

According to the most widely followed narrative, Blue Bird’s current share price is tracking very closely to fair value, based on a comprehensive blend of future earnings growth, margin assumptions, and discounting for risk.

Advances in Blue Bird's operational efficiency, including automation and lean manufacturing investments, as well as the construction of a new plant, are anticipated to improve cost structures and drive sustainable margin improvement and expanded net earnings over time.

Curious what is holding this price level? The narrative is built around estimates for profit margins and future growth rates, pegged to stronger earnings and a cautious but compelling earnings multiple. The real story lies in the underlying assumptions behind this “fair value.” Want to see which growth drivers matter most for Blue Bird’s valuation? The next section reveals just how these financial targets lock in the company’s current price level.

Result: Fair Value of $59.13 (ABOUT RIGHT)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent reliance on government incentives, along with the risk of shifting policy or funding shortfalls, could challenge Blue Bird’s electrification growth story ahead.

Find out about the key risks to this Blue Bird narrative.

Another View: Our DCF Model Sees Deeper Value

Looking at Blue Bird through the lens of the SWS DCF model provides a different picture. This approach suggests the shares may be significantly undervalued compared to today’s market price. Could the market be overlooking upside?

Look into how the SWS DCF model arrives at its fair value.

Stay updated when valuation signals shift by adding Blue Bird to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Blue Bird Narrative

If you see Blue Bird differently or want to dig into the numbers yourself, you can craft your own perspective quickly and easily. Do it your way.

A great starting point for your Blue Bird research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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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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