We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Blue Bird’s annualized revenue growth of 21.7% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

Blue Bird also reports its units sold, which reached 2,130 in the latest quarter. Over the last two years, Blue Bird’s units sold averaged 9% year-on-year growth. Because this number is lower than its revenue growth, we can see the company benefited from price increases.

This quarter, Blue Bird’s revenue fell by 1.2% year on year to $313.9 million but beat Wall Street’s estimates by 1.3%.

Looking ahead, sell-side analysts expect revenue to grow 10.3% over the next 12 months, a deceleration versus the last two years. Still, this projection is admirable and suggests the market is baking in success for its products and services.

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Operating Margin

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

Blue Bird was profitable over the last five years but held back by its large cost base. Its average operating margin of 4.2% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

On the plus side, Blue Bird’s operating margin rose by 7.6 percentage points over the last five years.

This quarter, Blue Bird generated an operating profit margin of 10.5%, down 1.4 percentage points year on year. Since Blue Bird’s operating margin decreased more than its gross margin, we can assume it was recently less efficient because expenses such as marketing, R&D, and administrative overhead increased.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Blue Bird’s EPS grew at a spectacular 16.1% compounded annual growth rate over the last five years, higher than its 5.7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Blue Bird’s earnings to better understand the drivers of its performance. As we mentioned earlier, Blue Bird’s operating margin declined this quarter but expanded by 7.6 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Blue Bird, its two-year annual EPS growth of 113% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q4, Blue Bird reported EPS at $0.92, in line with the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Blue Bird’s full-year EPS of $3.48 to grow 18.7%.

Key Takeaways from Blue Bird’s Q4 Results

We were impressed by how significantly Blue Bird blew past analysts’ sales volume expectations this quarter, which drove its revenue and EBITDA beats. On the other hand, its full-year revenue guidance slightly missed. Overall, we think this was a solid quarter with some key areas of upside. However, the market seemed to focus on the negatives, and the stock traded down 2.1% to $35 immediately after reporting.

Big picture, is Blue Bird a buy here and now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free .