Opinions
Stephen Takacsy, B. Eng, MBA
Grande West Transportation Group
BUS-X
PAST TOP PICK
Jun 03, 2019
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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