We came across a bullish thesis on Blue Bird Corporation (BLBD) on Substack by Hidden Market Gems. In this article, we will summarize the bulls’ thesis on BLBD. Blue Bird Corporation (BLBD)’s share was trading at $35.69 as of Feb 12th. BLBD’s trailing and forward P/E were 11.12 and 9.91 respectively according to Yahoo Finance.
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Blue Bird Corporation, a leading manufacturer of school buses with nearly 100 years of experience, is capitalizing on the increasing demand for cleaner, sustainable school transportation. In fiscal year 2024, the company achieved $1.1 billion in revenue, reflecting steady growth, driven largely by its pivot toward electric and propane-powered buses. These alternative fuel buses now represent 25% of total revenue, positioning Blue Bird as a key player in the rapidly expanding zero-emission vehicle market. The company’s profitability improved as well, with its gross margin reaching 17% in 2024, thanks to a growing mix of higher-margin electric and propane buses.
Blue Bird holds a 33% market share in the U.S. school bus market, serving a broad customer base that includes public school districts, private schools, and transportation contractors. This diversified clientele provides stability, while government funding programs, such as the EPA’s Clean School Bus Program, offer additional support. These programs have played a significant role in fueling the shift toward zero-emission buses, creating a supportive market environment for Blue Bird. The rising demand for cleaner school buses is particularly notable in suburban and rural districts, where public interest is increasing for more efficient and environmentally friendly transportation solutions.
The company’s emphasis on electric buses is a standout aspect of its business model. Blue Bird delivered its 2,000th electric bus in 2024, underscoring its leadership in zero-emission transportation. Electric buses are gaining popularity due to their lower operating costs, longer lifespan, and reduced environmental impact compared to traditional diesel buses. The demand for these vehicles is expected to grow as school districts nationwide seek to comply with stricter emissions regulations and government incentives. The company’s focus on electric and propane-powered buses has made it a pioneer in the industry, with these alternative fuel buses now accounting for over 50% of total sales in 2024.
In addition to its strong sales in alternative fuel buses, Blue Bird also benefits from a robust aftermarket service business, which includes parts sales, training, and service programs for its fleet. This provides the company with steady recurring revenue, further strengthening its financial position. Blue Bird’s commitment to safety is another key factor in its continued success, as evidenced by its introduction of industry-leading safety features like three-point seat belts for passengers and airbags for drivers in 2024. These safety enhancements reflect Blue Bird’s ongoing focus on innovation, ensuring its vehicles remain at the forefront of safety standards in the school transportation sector.
Blue Bird’s future growth is further supported by major government investments. In 2024, the company secured an $80 million federal grant to expand its electric vehicle manufacturing capacity, ensuring it can meet the growing demand for clean energy school buses. The company is also exploring international markets, particularly in Latin America, where school transportation infrastructure is expanding and governments are seeking sustainable, cost-effective solutions.
With a 12x P/E ratio, Blue Bird offers a compelling valuation compared to the overinflated valuations seen in the tech sector. Given its leadership in clean energy school transportation, solid financial performance, and the growing adoption of zero-emission buses, Blue Bird is well-positioned to continue its upward trajectory in the coming years.
Blue Bird Corporation (BLBD) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 25 hedge fund portfolios held BLBD at the end of the third quarter which was 24 in the previous quarter. While we acknowledge the risk and potential of BLBD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BLBD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.