Blue Bird (BLBD) Could Be 36% Undervalued As Growth Plans Stay In Focus

Blue Bird (BLBD) has drawn fresh attention after recent share price swings, with the stock down about 8% over the past month and roughly 27% over the past 3 months from Wednesday’s US$55.60 close.

Zooming out, Blue Bird’s recent drop sits against a very different longer record, with the share price still up 18.9% year to date and the 3 year total shareholder return at about 170%. This suggests that recent momentum has faded even as long term holders remain meaningfully ahead.

Scan how Blue Bird fits alongside other high quality industrials by running the list of solid balance sheet and fundamentals (25 results) that spotlights businesses with resilient finances and durable fundamentals.

So are Blue Bird’s recent declines a sign that investors have cooled on the story, or has sentiment shifted more than the underlying business has changed, leaving the current valuation out of sync?

Most Popular Narrative: 36% Undervalued

On the most followed view of Blue Bird, the narrative fair value of $87.38 sits well above the recent $55.60 close, which puts the recent share pullback against a framework that still treats the business as materially undervalued.

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.

Blue Bird's leadership in alternative-powered buses (with over 60% of unit mix and exclusive propane offerings) positions it for incremental margin gains versus competitors, particularly as higher-margin EV and alt-fuel products become a greater share of sales, positively impacting gross margins and owner loyalty.

See why 46 investors see Blue Bird as 36% undervalued.

Result: Fair Value of $87.38 (UNDERVALUED)

Still, two pressure points could undercut this Blue Bird narrative: weaker funding for clean buses that slows orders, and any stumble executing the Ford partnership and new plant plans.

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

Next Steps

With sentiment clearly split on Blue Bird, now is the moment to scan the data yourself, weigh both sides, and decide whether the mix of upside potential and downside risk fits your approach by reviewing the 4 key rewards and 3 important warning signs.

Looking for more investment ideas beyond Blue Bird?

If Blue Bird has your attention, do not stop there. Broaden your watchlist with a few targeted screens that can surface other compelling opportunities.

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• Target resilient performers by scanning companies on the 31 resilient stocks with low risk scores that aim to keep volatility contained.
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• Zero in on stronger balance sheets by running the list of solid balance sheet and fundamentals (25 results) and filter for firms with sturdier finances.

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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