Blue Bird Corp., a school bus manufacturer, has emerged as the top-performing electric vehicle (EV) stock this year. Despite being relatively unknown, Blue Bird has experienced significant growth in its EV bus business, largely due to a $5 billion government program. This success sets Blue Bird apart from other EV stocks, including popular names like Tesla, Rivian, and Lucid, which have seen declines in their market performance.
The electric school bus market is a key factor contributing to Blue Bird’s success. Electric school buses can be more expensive, costing over $300,000 compared to $100,000 for traditional buses. However, Blue Bird has capitalized on the funding provided by the US Environmental Protection Agency’s Clean School Bus Program. This program was established as part of the 2021 Bipartisan Infrastructure Law and aims to replace diesel school buses with electric ones. With the aid of this program, Blue Bird has sold a record-breaking 210 electric school buses in its recent fiscal quarter. Additionally, the company has seen a 56% increase in bookings compared to the same period last year, resulting in a backlog of approximately 500 electric bus orders.
This growth in the EV school bus sector has significantly impacted Blue Bird’s revenue. Electric school buses now account for 9% of the company’s revenue, up from 6% last year. As funding from the EPA’s program continues to flow, this percentage is expected to rise even further. Moreover, electric school buses offer Blue Bird the advantage of higher average selling prices and increased profit margins. Research from Barclays reveals that an electric school bus can sell for over $300,000, three times the price of a traditional bus. Blue Bird CEO Phil Horlock expressed optimism about the company’s changing revenue structure and increased gross margins during their recent earnings call.
Industry analysts at Needham are also optimistic about Blue Bird’s future performance. They believe that the growth of the company’s EV business is just beginning and expect strong demand as school districts vie for the opportunity to replace their old diesel buses with electric ones. The implementation of higher average selling prices over a multiyear period will allow Blue Bird and its competitors to drive costs lower before market prices take over. Needham has given Blue Bird a “Buy” rating, with a price target of $52.
In conclusion, Blue Bird Corp. has established itself as a leading player in the electric school bus market. Through government funding and the implementation of the Clean School Bus Program, Blue Bird has seen significant growth in its EV bus business. This success has resulted in higher revenue, an increased backlog of orders, and improved profit margins. With positive outlooks from industry analysts and the steady flow of funding, Blue Bird is poised to continue its dominance in the EV school bus sector.
