Blue Bird Corporation (BLBD) is the biggest EV school bus manufacturer in the United States. It achieved that status within two years of launching its product. The company has delivered 100% electric buses to nearly 25% of the United States over the last two years. BLBD has established a stable supply network within the country and is expanding its market reach.

While most EV stocks with sound business models are trading at sky-high valuations, BLBD is still flying under the radar. In terms of non-GAAP forward P/E, the company has recently been trading at 21.1x, 11.8% lower than the industry average of 23.93x.

However, given BLBD’s expertise in the highly specialized EV school bus market, we believe the company has significant growth potential as the country shifts from internal combustion vehicles to EVs in general. The stock has gained 5.4% over the past year. This, coupled with several other factors, has helped the stock to earn a “Buy” rating in our proprietary rating system.

Here is how our proprietary POWR Ratings system evaluates BLBD:

Trade Grade: A

BLBD has recently been trading above its 50-day and 200-day moving averages of $17.65 and $13.79, respectively, thus indicating a golden-cross uptrend. The stock has gained 92% over the past three months, reflecting solid short-term bullishness.

BLBD’s net income has increased 3% year-over-year to $11.94 million in the fiscal fourth quarter ended Oct. 3, 2020. Its EPS has risen 2.3% from the same period last year to $0.44. Its cash from operating activities has grown 9.3% from the prior-year quarter to $81.76 million over this period.

BLBD has garnered significant market share. Its proprietary all-electric school buses are a big success. It is currently the only company in the market designing electric buses that are suitable for all climates.

Buy & Hold Grade: C

In terms of proximity to 52-week high, which is a key factor that our Buy & Hold Grade takes considers, BLBD’s positioning is not too favorable. It has recently been trading at a 17.5% discount to its 52-week high of $26.88.

BLBD has gained 14.8% over the past three years. The company’s focus on the school bus sector of the EV market has allowed it to emerge as the largest manufacturer in the sector. Its total assets have increased by 2.4% over the past three years.

Peer Grade: D

BLBD is currently ranked #43 of 67 stocks in the Auto Parts industry. Other popular stocks in this industry are Aptiv PLC (APTV), Johnson Controls International (JCI), and Cummins Inc. (CMI).

APTV, JCI, and CMI have gained 58.1%, 27.1%, and 45%, respectively, over the past year. This compares to BLBD’s 5.4% returns over the same period.

Industry Rank: A

The auto parts industry is ranked #8 of 123 industries in the StockNews universe. The industry is poised to benefit from an ongoing EV revolution globally, as people shift from gasoline fueled vehicles to greener alternatives.

While most countries are already banning the sale of internal combustion vehicles, and a Biden presidency is expected to facilitate the domestic EV industry, the demand for sustainable automotive parts is expected to rise. Moreover, as people are expected to travel more frequently post pandemic, the demand for cars, and spare parts for them, should also rise.

Overall POWR Rating: B (Buy)

BLBD is rated “Buy” due to its solid short- term bullishness, impressive financials, and underlying industry strength, as determined by the four components of the overall POWR Rating.

Bottom Line

Given the Democrats' stance on clean energy, BLBD has the potential to grow significantly. With the sale of new internal combustion vehicles likely to be banned by 2035, BLBD’s electric school buses are expected to be the most popular in this sector, given their features and broad climate adaptability.

BLBD has an average broker rating of 1.75, indicating favorable analyst sentiment. Of two Wall Street Analysts that rated the stock, 1 rated it “Buy.” The consensus EPS estimate of $0.18 for the current quarter ending Mar. 31, 2021 represents an 80% rise year-over-year. Analysts expect BLBD’s revenue to rise 16.8% to $947.90 million next year.

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