Opinions
Robert McWhirter
Grande West Transportation Group
BUS-X
COMMENT
Jul 14, 2017
Stock price when the opinion was issued
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It comes down to contracts and orders. Now is a rebuilding year for them. They have to prove they can be profitable in a low-delivery schedule. Compare them to the larger NFI which has a larger backlog and overall business, though neither is doing well this year.
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. The stock has seen an amazing recovery with business picking up. The move into EV was welcomed but the space remains competitive. It is not without risk, and to continue their EV projects, they will need capital. Expectations are high which adds additional risk. Unlock Premium - Try 5i Free
Buses may be electric, CNG, or clean diesel and electric buses are offered by the company.
Over the past five years, sales have shrunk by a compounded annual growth rate of 14.5%, while EBITDA and Net income have grown at a CAGR of more than 100% over the past five years. The company is expected to turn profitable in 2024.
While the balance sheet has improved over the year, negative cash flows and EBITDA make it less attractive compared to its peers.
We think some of this is priced in, however, VCM is also expected to grow at multiples of its current sales while slowing growth is expected for others.
There is still a long way to go before the growth materializes, and that's still an 'if' it does.
We would consider the name risky.
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Manufactures buses that are slightly smaller than a regular bus, as well as costing less. They have a huge backlog. A niche product because of the shorter turning radius, less expensive, and qualifies for “made in the US”. There are good opportunities both in Canada and the US. Earnings growth is expected to go from $.05 in 2017 to $.15 in 2018 against a stock price of $2.63, which gives you about an 18X PE multiple. Expects you would be happy with this investment.