Since April 2021, the S&P 500 has delivered a total return of 65.1%. But one standout stock has more than doubled the market - over the past five years, Blue Bird has surged 145% to $63.98 per share. Its momentum hasn’t stopped as it’s also gained 13.5% in the last six months thanks to its solid quarterly results, beating the S&P by 10.9%.

Following the strength, is BLBD a buy right now? Or is the market overestimating its value? Find out in our full research report, it’s free.

Why Is BLBD a Good Business?

With around a century of experience, Blue Bird (NASDAQ: BLBD) is a manufacturer of school buses and complementary parts.

1. Skyrocketing Revenue Shows Strong Momentum

A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Blue Bird grew its sales at an impressive 11.9% compounded annual growth rate. Its growth surpassed the average industrials company and shows its offerings resonate with customers.

2. Increasing Free Cash Flow Margin Juices Financials

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

As you can see below, Blue Bird’s margin expanded by 23.5 percentage points over the last five years. The company’s improvement shows it’s heading in the right direction, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability. Blue Bird’s free cash flow margin for the trailing 12 months was 10.8%.

3. New Investments Bear Fruit as ROIC Jumps

We like to invest in businesses with high returns, but the trend in a company’s ROIC can also be an early indicator of future business quality.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Blue Bird’s ROIC has increased. This is a great sign when paired with its already strong returns, but we also recognize its lack of profitable growth during the COVID era was the primary reason for the change.

Final Judgment

These are just a few reasons Blue Bird is a rock-solid business worth owning, and with its shares beating the market recently, the stock trades at 13.9× forward P/E (or $63.98 per share). Is now a good time to buy? See for yourself in our in-depth research report, it’s free.

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