CAE (CAE) AI Stock Analysis

• Market Cap: $10.83B
• Dividend Yield: N/A
• Average Volume (3M): 660.76K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.86
• Revenue Growth: 1.44%
• EPS Growth: -183.14%
• Country: CA
• Employees: 13,000
• Sector: Industrials
• Sector Strength: 72
• Industry: Aerospace & Defense
• EPS (TTM): -0.73
• Shares Outstanding: 319,793,820
• 10 Day Avg. Volume: 496,948
• 30 Day Avg. Volume: 660,765
• 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: $40.10
• Price Target Upside: 18.48% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 11

CAE's overall stock score reflects solid financial performance marked by strong revenue growth and cash flow generation. However, profitability issues and high leverage are key concerns. The earnings call highlighted significant growth in key segments and strategic partnerships, contributing positively. On the technical side, mixed signals indicate potential challenges ahead.

Positive Factors

Business Aviation Market

The outlook for the business aviation market remains constructive, with FFS deliveries expected to rise due to strong orders over the past two years.

Growth in Defense Segment

Outlook for Defense brightens with strong momentum in orders in recent quarters.

Negative Factors

Production Risks

Near-term risks to production remain due to factors like SPS fire, de-stocking, and tariffs.

Supply Chain Disruption

The uncertainty regarding tariffs increases the risk of further disruption of an already vulnerable supply chain in light of Boeing’s execution challenges and COVID-19.

Volatile Macro Landscape

The downgrade of Joby Aviation (JOBY) to Equal-weight from Overweight as the volatile macro landscape is contemplated.

CAE Business Overview & Revenue Model

Company Description

CAE is a global leader in training for the civil aviation, defense and security, and healthcare markets. The company offers an extensive range of simulation technologies, training services, and digital solutions to airlines, aircraft manufacturers, defense and security forces, and healthcare professionals. CAE is renowned for its comprehensive pilot training programs, flight simulators, and integrated training solutions that enhance safety and efficiency across multiple sectors.

How the Company Makes Money

CAE generates revenue primarily through its three main business segments: Civil Aviation Training Solutions, Defense and Security, and Healthcare. In Civil Aviation, CAE earns money by providing pilot and crew training services, selling flight simulators, and offering aviation training software and solutions. The Defense and Security segment contributes to earnings through contracts with military and government agencies to provide training systems, mission support, and operational solutions. In the Healthcare sector, CAE makes money by selling medical simulation products and offering training for healthcare professionals. Key revenue streams include long-term service agreements, product sales, and strategic partnerships with industry leaders and governments, which help drive consistent revenue growth.

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: Positive
• Last Price: 33.85
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CAE, the sentiment is Positive. The current price of 33.85 is above the 20-day moving average (MA) of 32.77, below the 50-day MA of 34.38, and above the 200-day MA of 30.02, indicating a neutral trend. The MACD of -0.34 indicates Negative momentum. The RSI at 53.37 is Neutral, neither overbought nor oversold. The STOCH value of 94.83 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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$3.27B	40.61	7.09%	―	33.74%	61.09%
MAL	68 Neutral	C$721.09M	20.33	4.63%	0.79%	7.13%	285.41%
CAE	67 Neutral	$10.83B	―	-5.31%	―	1.44%	-183.14%
Sector *	63 Neutral	$4.27B	11.40	5.38%	214.63%	4.11%	-8.98%
BLN	62 Neutral	C$560.36M	―	-14.10%	―	31.68%	67.90%
IMP	47 Neutral	C$130.66M	33.54	1014.00%	―	190.64%	―

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.