An interesting stock that I came across in my searches for the next purchase - Canadian Bird Construction Inc. (TSE: BDT). What caught my attention is the snowflake analysis chart that says the stock has exceptional growth potential, undervalued, and pays a dividend with a 5.34% yield (which is not on my priority list, but good to have). I like exceptional growth at a good value.
BDT Stock Overview: company, category description
Bird Construction Inc. operates as a general contractor in Canada. The company primarily focuses on projects in the industrial, commercial, and institutional sectors of the general contracting industry. It serves clients in the commercial, institutional, retail, multi-tenant residential, industrial, mining, water and wastewater, energy, civil, light industrial, and renovation, and restoration sectors. Bird Construction Inc. was founded in 1920 and is based in Mississauga, Canada.
The chart for BDT stock is not something that will make you excited at the first glance. The price has been declining for the past 4 years despite a stable dividend and earnings. However, Elliot Wave adepts might notice the price seen to have completed its 3-level cycle. Also, most recently it wants to break through the resistance level of $7.30.
Zooming in to the recent price action you can see the price is attempting to break out with a big green candle on high volume and a bull flag.
BDT Stock Financial overview
Sales for Bird Construction Inc. were generally flat for the past 3 years, but analysts are predicting that sales will grow substantially in the next 2 years.
EPS for Bird Construction Inc. was slowly growing despite flat sales in the past. From the beginning of 2019 EPS grew from brief red to $0.20 per quarter. EPS for the past year was $0.555 which gives us a PE ratio of 13.2. If EPS continues to maintain at the current level of $0.20, this gives $0.80 EPS per annum, providing for a PE ratio of $7.30/$0.80 = 9.1
Why do analysts think Bird Construction Inc. will suddenly grow revenues?
In 2020, the Company secured $996.1 million of new contract awards and change orders and executed $949.5 million of construction revenues, and through the business combination, $995.7 million of Backlog was added. Backlog of $2,589.7 million at September 30, 2020 increased 79.8% from Backlog of $1,440.5 million at September 30, 2019. Backlog increased by $1,042.3 million, or 67.4%, from the $1,547.4 million of Backlog recorded on December 31, 2019
BDT Stock Key financial ratings/Stock Value
As mentioned above, the current PE for BDT is around 9. With the predicted growth in EPS to $1.2 by the end of 2022 and using the current price for BDT stock of $7.30, this would give us a forward PE of just 6. Such growth and low price provide for a stellar PEG (Price-to-Earnings Growth) ratio of just 0.3. Just to remind anything below 1 is considered to be a good value for the expected growth.
The average PE ratio for the Canadian Construction industry currently stands at 21.6. Even if we use a modest PE of 15, the stock should be priced around $1.2 times 15 = $18.
BDT Stock Analytics Predictions
Based on 5 analysts offering 12-month price targets for Bird Construction in the last 3 months. The average price target is C$9.80 with a high forecast of C$11.00 and a low forecast of C$9.00. The average price target represents a 34.25%increase from the last price of C$7.30.
BDT stock risks
1. COVID as usual.
2. Recession resulting in failure to renew contracts in the future.
Disclaimer: I own BDT stock. I do not suggest you should buy any of the stocks I write about. As usual, please do your own due diligence before investing your own money in any of the stocks I write about. The above analysis is quite basic and just gives ideas for further research. A much deeper analysis is required for each stock, including the analysis of operations, debt, etc. I may sell any of the stocks I say I currently own at any moment before it reaches the targets that I set or keep them for even when they reach the target.