CAE (CAE) AI Stock Analysis

• Market Cap: $9.77B
• Dividend Yield: N/A
• Average Volume (3M): 811.09K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.82
• Revenue Growth: 1.44%
• EPS Growth: -183.14%
• Country: CA
• Employees: 13,000
• Sector: Industrials
• Sector Strength: 63
• Industry: Aerospace & Defense
• EPS (TTM): -0.73
• Shares Outstanding: 319,793,820
• 10 Day Avg. Volume: 637,637
• 30 Day Avg. Volume: 811,089
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 2.46
• Price to Cash Flow (P/CF): 6.60
• P/FCF Ratio: 7.80
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$40.41
• Price Target Upside: 32.24% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 10

CAE's overall stock score reflects a strong financial performance with a robust backlog and free cash flow, though profitability remains a concern. Positive technical indicators and recent corporate events bolster the outlook, while valuation challenges due to negative earnings weigh on the score.

Positive Factors

Acquisition Benefits

CAE has the potential to harness the benefits of several acquisitions made in recent years, which should support strong growth in earnings, free cash flow, and ROIC improvement.

Defense Sector Growth

Outlook for Defense brightens with strong momentum in orders and the ongoing ramp-up of the FACT contract, suggesting growth faster than consensus expectations.

Market Performance

CAE stock price is up 51% over the past 6 months, indicating strong market performance.

Negative Factors

Leadership Transition

Greater visibility into a pending CEO succession and go-forward strategy might be needed to build confidence in the medium-term earnings/FCF algorithm and capital allocation strategy.

U.S. Market Concerns

Concerns remain regarding the U.S. market lagging, despite strong demand for business jets and international growth.

CAE Business Overview & Revenue Model

Company Description

CAE Inc., together with its subsidiaries, provides simulation training and critical operations support solutions worldwide. It operates through three segments: Civil Aviation, Defense and Security, and Healthcare. The Civil Aviation segment provides training solutions for flight, cabin, maintenance, and ground personnel in commercial, business, and helicopter aviation; flight simulation training devices; and ab initio pilot training and crew sourcing services, as well as end to end digitally enabled crew management, training operations solutions, and optimization software. The Defense and Security segment offers training and mission support solutions for defense forces across multi-domain operations, OEMs, government agencies and public safety organizations. The Healthcare segment provides integrated education and training solutions, including interventional and imaging simulations, curricula, audiovisual debriefing solutions, center management platforms, and patient simulators for healthcare students and clinical professionals, hospital and university simulation centers, medical and nursing schools, paramedic organizations, defense forces, medical societies, public health agencies and OEMs. The company was formerly known as CAE Industries Ltd. and changed its name to CAE Inc. in 1993. CAE Inc. was incorporated in 1947 and is headquartered in Saint-Laurent, Canada.

How the Company Makes Money

CAE generates revenue through multiple streams, primarily driven by the sale and support of simulation products and training services. In the civil aviation sector, CAE earns income from providing pilot training programs, flight simulators, and maintenance services. The defense and security segment contributes to revenue through the sale of military training systems and operational support services. In the healthcare sector, CAE generates income by providing simulation-based training solutions to medical and educational institutions. Additionally, CAE benefits from long-term service contracts and partnerships with airlines, defense organizations, and healthcare providers, which ensure a steady flow of revenue. The company's strategic partnerships and technological advancements further enhance its competitive edge and financial performance.

CAE Financial Statement Overview

Summary

CAE presents a mixed financial performance. While revenue growth and gross margins are commendable, profitability remains a concern with negative net margins. The balance sheet is stable, but leverage is relatively high, requiring careful debt management. Strong free cash flow highlights operational efficiency in cash generation, although profitability challenges persist. Continued focus on reducing costs and improving operational efficiency is essential for enhancing financial health.

Income Statement

The company shows strong revenue growth with a 8.1% increase from the previous year to TTM (Trailing-Twelve-Months). Gross profit margin remains healthy at approximately 26.1% in TTM, indicating effective cost management. However, a significant net loss in TTM reflects challenges in achieving profitability, possibly due to increased operating expenses or other non-operational factors. EBITDA margin improved to 7.3% in TTM, but EBIT margin is negative, highlighting operational inefficiencies or extraordinary expenses.

Balance Sheet

CAE exhibits a solid equity base with an equity ratio of 42.2% in TTM, indicating financial stability. The debt-to-equity ratio is relatively high at 0.78, signaling a reliance on debt financing which could imply risk if interest rates rise. Return on equity is negative due to net losses, suggesting inefficiencies in utilizing equity to generate profits.

Cash Flow

The company has demonstrated strong free cash flow growth, with a substantial increase to CAD 355 million in TTM, indicating healthy cash generation capabilities. The operating cash flow to net income ratio is robust, reflecting the ability to convert sales into actual cash, despite negative net income. However, free cash flow to net income is constrained by negative net profits, suggesting room for improvement.

Breakdown
TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement		Total Revenue
4.56B	4.28B	4.20B	3.37B	2.98B	3.62B
	Gross Profit
1.19B	1.15B	1.17B	955.50M	765.00M	1.08B
	EBIT
591.00M	-185.40M	474.00M	284.20M	48.40M	537.10M
	EBITDA
331.10M	117.70M	747.00M	548.10M	351.00M	815.90M
	Net Income Common Stockholders
-231.30M	-304.00M	222.70M	141.70M	-47.20M	311.40M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
312.90M	160.10M	217.60M	346.10M	926.10M	946.50M
	Total Assets
2.62B	9.83B	10.44B	9.58B	8.75B	8.48B
	Total Debt
692.40M	3.07B	3.25B	3.05B	2.35B	3.31B
	Net Debt
379.50M	2.91B	3.03B	2.70B	1.43B	2.37B
	Total Liabilities
1.47B	5.53B	5.85B	5.49B	5.54B	5.91B
	Stockholders Equity
1.16B	4.22B	4.51B	4.01B	3.14B	2.49B
Cash Flow		Free Cash Flow
355.00M	126.30M	-16.90M	55.40M	203.00M	161.10M
	Operating Cash Flow
795.80M	566.90M	408.40M	418.20M	366.60M	545.10M
	Investing Cash Flow
-468.30M	-215.40M	-400.70M	-2.24B	-343.40M	-495.90M
	Financing Cash Flow
-163.30M	-395.30M	-152.60M	1.26B	-21.30M	443.40M

CAE Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 30.56
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CAE, the sentiment is Negative. The current price of 30.56 is below the 20-day moving average (MA) of 34.94, below the 50-day MA of 34.97, and above the 200-day MA of 29.57, indicating a neutral trend. The MACD of 0.19 indicates Negative momentum. The RSI at 50.55 is Neutral, neither overbought nor oversold. The STOCH value of 39.77 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:CAE.

CAE Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MDA	75 Outperform	C$2.93B	36.44	7.09%	―	33.74%	61.09%
CAE	72 Outperform	$9.77B	―	-5.31%	―	1.44%	-183.14%
MAL	68 Neutral	C$665.66M	18.77	4.63%	0.86%	7.13%	285.41%
BLN	65 Neutral	C$534.80M	―	-14.10%	―	31.68%	67.90%
Sector *	62 Neutral	$7.26B	12.38	3.01%	3.40%	3.58%	-14.13%
IMP	58 Neutral	C$84.18M	23.82	1014.00%	―	86.62%	94.45%

CAE Corporate Events

CAE Inc. Achieves Record Financial Growth in Q3 Fiscal 2025

CAE Inc. reported a strong third quarter for fiscal 2025, with significant financial growth marked by a 12% increase in revenue to $1.223 billion and a substantial rise in earnings per share from $0.18 to $0.53. The company’s operating income doubled from the previous year, driven by a successful SIMCOM transaction and increased order intake in both civil and defense sectors. CAE’s strategic initiatives, including enhancing its stake in SIMCOM and securing long-term training agreements, have bolstered its market position. The company also achieved a record $410 million in free cash flow and a backlog exceeding $20 billion, underpinning its robust future prospects. CAE’s recognition as one of Canada’s top employers further underscores its strong corporate culture and industry standing.

CAE Inc. Announces Strategic Board Changes

CAE Inc. announced the appointment of four new directors to its Board, including Calin Rovinescu as Chair, signaling a strategic shift towards renewed leadership. This change reflects stakeholder consultations and aims to guide CAE’s growth and value creation, maintaining its strong position in the aerospace and defense markets. The appointments coincide with the retirement of four directors who have overseen significant company growth, emphasizing a seamless leadership transition.