School bus company Blue Bird (NASDAQ: BLBD) announced better-than-expected revenue in Q1 CY2026, but sales fell by 1.7% year on year to $352.6 million. The company’s full-year revenue guidance of $1.75 billion at the midpoint came in 15.6% above analysts’ estimates. Its non-GAAP profit of $1 per share was 15.3% above analysts’ consensus estimates.

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Company Overview

With around a century of experience, Blue Bird (NASDAQ: BLBD) is a manufacturer of school buses and complementary parts.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Thankfully, Blue Bird’s 14.3% annualized revenue growth over the last five years was exceptional. Its growth surpassed the average industrials company and shows its offerings resonate with customers, a great starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Blue Bird’s annualized revenue growth of 8.8% over the last two years is below its five-year trend, but we still think the results were respectable.

Blue Bird also reports its number of units sold, which reached 2,148 in the latest quarter. Over the last two years, Blue Bird’s units sold averaged 2.5% 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 1.7% year on year to $352.6 million but beat Wall Street’s estimates by 6.5%.

Looking ahead, sell-side analysts expect revenue to grow 3.4% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and indicates its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.

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Operating Margin

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Blue Bird was profitable over the last five years but held back by its large cost base. Its average operating margin of 6.9% 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 13.7 percentage points over the last five years, as its sales growth gave it immense operating leverage.

This quarter, Blue Bird generated an operating margin profit margin of 11.1%, up 1.7 percentage points year on year. The increase was encouraging, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Blue Bird’s EPS grew at 45.1% compounded annual growth rate over the last five years, higher than its 14.3% 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 quality to better understand the drivers of its performance. As we mentioned earlier, Blue Bird’s operating margin expanded by 13.7 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Blue Bird, its two-year annual EPS growth of 24.7% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q1, Blue Bird reported adjusted EPS of $1, up from $0.96 in 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 $4.51 to grow 5.2%.

Key Takeaways from Blue Bird’s Q1 Results

We were impressed that Blue Bird beat analysts’ revenue and EBITDA expectations this quarter. We were also excited the company lifted full-year revenue guidance and issued strong EBITDA guidance as well. Zooming out, we think this was a very good print with some key areas of upside. The stock traded up 22.9% to $79.87 immediately after reporting.

Indeed, Blue Bird had a rock-solid quarterly earnings result, but is this stock a good investment here? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).