Passing on Blue Bird
Oct 1, 2024
Blue Bird is one of the largest makers of school buses in the U.S. Its current growth spurt is being driven by the alternative fuel bus segment (particularly electric and propane), and the government's $5 billion EPA clean bus program. School districts are jumping at this incentive to replace some of the 200,000 or so obsolete buses still in operation across the country. However, by our criteria it isn't a particularly attractive business. There is no recurring revenue, and growth is clearly coming from a limited-time (5 year) incentive. While Blue Bird is the (current) leader in the segment, there is plenty of competition and no real competitive moat. That makes it very hard to come up with a reasonable fair value, and sets the business up for considerable volatility. It gets a pass.
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