Bombardier, Inc. (TSX:BBD.B) got some good news on Wednesday when it was announced that it had signed a contract with the New Jersey Transit Corporation. The deal, for 113 commuter rail cars, is valued at US$669 million. It’s a much-needed result for Bombardier, who recently lost on its home turf when it couldn’t land a deal with Via Rail.
The problem for Bombardier, however, hasn’t been securing deals, it’s been its performance. The company has earned a bad reputation for being late and not meeting customer expectations. It has also struggled to turn a profit, with two of its past five quarters finishing in the red.
However, Bombardier has worked with New Jersey Transit on multiple occasions in the past and the familiarity should help alleviate concerns that it won’t be able to meet expectations. If nothing else, it’s a good opportunity for the company to regain trust from investors and could be a way to secure more deals with a successful outcome.
With that being said, this is still not a stock I’d consider buying today as Bombardier still has a long way to go in proving that it’s an investable company. Sales have fallen over the years and in its most recent quarter its top line was down 5%. A lot of debt on its books and negative equity are a couple of other reason why investors might not be ready to take a chance on Bombardier just yet.
The stock was up over 3% in trading as a result of the news, but overall Bombardier is still down around 60% over the past six months.
