Since December 2020, the S&P 500 has delivered a total return of 82.5%. But one standout stock has more than doubled the market - over the past five years, Blue Bird has surged 186% to $51.52 per share. Its momentum hasn’t stopped as it’s also gained 22.8% in the last six months thanks to its solid quarterly results, beating the S&P by 9.8%.

Is it too late to buy BLBD? Find out in our full research report, it’s free for active Edge members.

Why Are We Positive On BLBD?

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 sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Blue Bird grew its sales at an impressive 11% 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 20.1 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 10.4%.

3. New Investments Bear Fruit as ROIC Jumps

ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

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. Blue Bird’s ROIC has increased significantly over the last few years. This is a great sign when paired with its already strong returns. It could suggest its competitive advantage or profitable growth opportunities are expanding.

Final Judgment

These are just a few reasons Blue Bird is a rock-solid business worth owning, and with its shares outperforming the market lately, the stock trades at 12.1× forward P/E (or $51.52 per share). Is now a good time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .

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