Jet planes are assembled at Bombardier's aircraft assembly centre in Mississauga in May.Sammy Kogan/The Canadian Press
Imagine what you might tell your children if you respond to U.S. President Donald Trump’s trade threats against Canada with a move of your own.
“He went after our steel, our lumber and our cars. I felt so helpless,” you might begin. “But then he went after Bombardier last weekend, threatening to ban the company’s jet sales in the United States. I knew right away that there was only one thing for me to do.”
Your hypothetical youngsters will squirm in anticipation, so wait a beat.
“What did you do?” they might ask.
“I bought shares.”
Be prepared, though. You might not get the supportive cheers you were hoping for.
“Have you made money yet? I saw that the share price fell 25 bucks early on Tuesday,” your youngest child might say.
Perhaps the middle child will then weigh in with, “You didn’t use the money in my education fund, did you?”
At which point, the eldest child – who worships at the feet of Warren Buffett – will no doubt raise the issue of valuation: “The stock’s forward price-to-earnings ratio is over 22. For a company without a moat!”
Always with the moats.
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Leaning on the Canadian aerospace company as an elbows-up play during the U.S.-Canada trade war will only go so far with these young skeptics. You will have to defend your choice with a case based on sound fundamentals.
Start by reminding them of Bombardier Inc.’s BBD-B-T turnaround over the past five years. Demand for its aircraft, including the Global 8000, is strong. Aftermarket revenue for servicing existing planes is rising at a double-digit pace.
And the company is benefiting from growth in one of today’s hottest sectors, defence. It contributes aircraft to NATO’s Airborne Early Warning & Control fleet and the U.S. Army. An expanded Canadian footprint is looking like a strong possibility.
Bombardier’s financial performance is impressive, too.
Revenues have increased 57 per cent from 2021 through 2025. Gross margins have expanded to 20 per cent, up from 15.2 per cent, according to S&P Global Market Intelligence.
Earnings have swung to $7.72 a share in 2025, up from a loss of $3.67 a share in 2021.
Best of all, the share price has soared 780 per cent over the past four years, and 89 per cent over the past year. Bombardier is looking like a blue-chip stock again.
Or it was. Will Mr. Trump derail the stock?
On Monday, he used his social-media platform to declare: “NO MORE SELLING BOMBARDIER IN THE UNITED STATES!”
Given the initial slump in the share price, some investors took the threat seriously. And to be clear, analysts aren’t laughing off the threat as an impossibility – which suggests that the stock could get bogged down under a layer of uncertainty for the duration of the trade war.
“It is too early to assess the fundamental risk as Bombardier has thus far navigated the geopolitical uncertainties without any major demand impact,” Konark Gupta, an analyst at Bank of Nova Scotia, said in a note this week.
But, he added: “If the threat turns into a ruling, the potential impact would be significant, given the U.S. accounts for the majority of Bombardier’s business.”
U.S. customers generated 56 per cent of the company’s revenues last year. And Mr. Gupta estimates that the U.S. is home to more than 70 per cent of the company’s global fleet of existing planes.
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While that sounds as though Mr. Trump enjoys considerable leverage over Canada, and Bombardier, there is another side to this story.
Bombardier is a globally diversified manufacturer with direct employees in more than 20 U.S. states. Its supply chain relies on 2,800 U.S. companies, including GE Aerospace and Honeywell International Inc., employing thousands more.
That suggests Mr. Trump’s threats could backfire if they lead to American job losses. Given the U.S. President’s track record – his policies have stoked oil prices, borrowing costs and domestic inflation – self-inflicted harm can’t be ruled out.
But remember: This is also the TACO President. His threats often amount to little more than bluster.
Arguably, the biggest risk in buying Bombardier shares today has nothing to do with the trade war. Rather, the shares are still pricey after a four-year rally. The P/E ratio expanded to a high of nearly 30 in July, up from 16 one year ago.
If Mr. Trump delivers a bargain, take it. But, to be safe, maybe wait for a rebound before bragging to your children.