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Investor Insights

This summary was created by AI, based on 14 opinions in the last 12 months.

CAE Inc, with symbol CAE-T, is a company that has been facing challenges in its operating margin due to lumpy earnings from various segments and slower demand for pilot training. However, there are positive prospects on the defense side, with potential for margin improvement. The company has also shown resilience with consistent revenue growth and a significant backlog, though it has historically faced execution issues. CAE Inc operates in the competitive aerospace/defense industry and has struggled with fixed-price contracts on the defense side, but is signing more profitable contracts and holds a strong market position.

Consensus
Mixed
Valuation
Fair Value
HOLD
CAE Inc

Operating margin gets hit by a lot of factors, not least of which is lumpy earnings from various segments. Demand for pilot training has been slower than hoped. Pickup on defense side, and those margins should improve.

transportation equip & components
SELL ON STRENGTH
CAE Inc
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

CAE EPS of 24c beat estimates of 19c; revenue of $1.13B beat estimates of $1.08B. Backlog is now a record $18B. We have liked the stock historically, but it has had lots of execution issues. It has high market share, but we always thought it should be more profitable overall, considering its moat and duopolistic industry with really just one other serious global competitor. We would consider 25X earnings fairly priced and would prefer an exit into something more reliable. 
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transportation equip & components
HOLD
CAE Inc

Getting more into defense simulation, away from medical. Challenged by fixed-price contracts, but many are rolling off and will be renegotiated with inflation-escalator clauses. Has been volatile. Bright future. Holds it in client TFSAs. 

transportation equip & components
DON'T BUY
CAE Inc

Sideways range for a while, but improving technically. Issue is that given we're late cycle, there will be headwinds next year. He'd stay on the sidelines. Better places to put $$ to work.

transportation equip & components
PAST TOP PICK
CAE Inc
(A Top Pick Feb 05/24, Down 9%)

(Note short timeframe.)  Attributes underpinning her recommendation are still there. Pilot shortage. Revenue is still consistent, stable, growing. Struggled on defense side, margins have come off, but geopolitical tensions are still high. Signed 25-year, $11B contract in May; services still in demand.

transportation equip & components
HOLD
CAE Inc
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

We would caution against reading too much into a couple of days' trading activity. CAE has had potential and a large backlog for some time, but it has not been able to execute well. It is down 21% over a year, and is still not really cheap at 21X earnings. Its last quarter was OK but not overly compelling. We would be OK continuing with an already-established clean up program. 
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transportation equip & components
WAIT
CAE Inc

The flight simulator business is an attractive one and CAE has a competitive advantage in that space. However with delivering planes being a challenge recently, there are not as many pilots needed.

transportation equip & components
BUY
CAE Inc

Difficulty with defense side, longer-term contracts crimping profitability, those will wind down in 2025. Signing more profitable contracts in the meantime. Likes it. Very well run. Not a lot of similar companies, so shares usually trade at a premium. Market-average profitability, pretty strong balance sheet.

Geopolitical conflict begets defense spending. Airline travel was one of the key drivers of the elevated CPI print yesterday, so pilots will continue to be in demand. He'd buy here, and add more on weakness.

transportation equip & components
PAST TOP PICK
CAE Inc
(A Top Pick Feb 05/24, Down 4%)

The training part is good but It is down because of the defense side. However since it was picked it announced an 11 billion dollar contract with the Royal Canadian Airforce over the next 25 years to train pilots. She would still buy it today.

transportation equip & components
BUY
CAE Inc
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

 We would say CAE's major competitors are other large aerospace/defense players who all have some varying degree of involvement in the aircraft simulation space. Companies like LHX, LMT, BA, and GD all have varying involvements in the simulations space. We think CAE's moat is still wide as the civil business has been strong over the long-term. The obvious mistake that can be point towards is the acquisition of the defense segment which has mainly created problems. The company has struggled to clear legacy contracts associated with this segment off its books for a while now causing margin pressure. Once the legacy contracts are cleared, CAE should see nice growth and margin improvements in defence but management stated that this could take six-to-eight quarters to occur in recent earnings. This was the major reason for removing CAE from the model portfolios. Additionally, in our flash report from Feb 2023 we noted its outlook was quite strong, but in our most recent report, guidance on margins started to wane, and this caused us to take a more cautious approach. Selling CAE also provided us with the opportunity to reduce our already high exposure to industrials and add to a smaller sector exposure, materials

At the time of report writing we felt a B+ was still warranted on the strength of the civil segement and that the defense segement had room for improvement this year. In light of recent earnings, we would like to see how defense performs this year and a potential downgrade is on the table.
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transportation equip & components
DON'T BUY
CAE Inc

Weighed down by 8 legacy contracts, which management is trying to exit. That would help with margins. Turnaround will probably take a few quarters. If successful, growth around 19%. Not cheap at 22x. Better risk/reward elsewhere.

transportation equip & components
PARTIAL BUY
CAE Inc

Problem is that many contracts they signed with airlines don't adjust to inflation so this is squeezes margins. New contracts will reflect inflation. He likes their business model, likes it long term.

transportation equip & components
BUY ON WEAKNESS
CAE Inc

It is oversold but there is more and more demand for their products with many new pilots needing training.

transportation equip & components
TOP PICK
CAE Inc

It stopped paying a dividend during the pandemic but could re-instate it. There is a pilot shortage and it is estimated that 264 000 new pilots will be needed by 2029. All will need training and simulation exercises, as well as the cabin crews in safety training, etc.  Also consider that pilots work their way up, starting with regional jets and progressing to larger ones so constant training will be needed, which means that there will be a constant stream of income for CAE. It is the biggest flight simulator and training company in the world.  There is also a defense sector which you are getting basically for free.      Buy 11  Hold 1  Sell 1

(Analysts’ price target is $35.17)
transportation equip & components
HOLD
CAE Inc
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

EPS of 27c beat estimates of 21c; Revenue of $1.089B beat estimates by 3%. EBITDA of $229M beat estimates by 2.4%. Three brokers lowered targets. Civil aviation was strong but the defense sector experienced lower than expected results and margin pressure. Defense margins were guided to mid-single-digit, vs consensus of 6% to 7%. Revenue rose 9.6%. Backlog did grow 11% to $11.8B. Not great results, but we think still worth keeping for its backlog and a potential growth recovery, which expected in 2024, based on consensus estimates. 
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transportation equip & components
Showing 1 to 15 of 725 entries

CAE Inc(CAE-T) Rating

Ranking : 4 out of 5

Bullish - Buy Signals / Votes : 6

Neutral - Hold Signals / Votes : 3

Bearish - Sell Signals / Votes : 3

Total Signals / Votes : 12

Stockchase rating for CAE Inc is calculated according to the stock experts' signals. A high score means experts mostly recommend to buy the stock while a low score means experts mostly recommend to sell the stock.

CAE Inc(CAE-T) Frequently Asked Questions

What is CAE Inc stock symbol?

CAE Inc is a Canadian stock, trading under the symbol CAE-T on the Toronto Stock Exchange (CAE-CT). It is usually referred to as TSX:CAE or CAE-T

Is CAE Inc a buy or a sell?

In the last year, 12 stock analysts published opinions about CAE-T. 6 analysts recommended to BUY the stock. 3 analysts recommended to SELL the stock. The latest stock analyst recommendation is . Read the latest stock experts' ratings for CAE Inc.

Is CAE Inc a good investment or a top pick?

CAE Inc was recommended as a Top Pick by on . Read the latest stock experts ratings for CAE Inc.

Why is CAE Inc stock dropping?

Earnings reports or recent company news can cause the stock price to drop. Read stock experts’ recommendations for help on deciding if you should buy, sell or hold the stock.

Is CAE Inc worth watching?

12 stock analysts on Stockchase covered CAE Inc In the last year. It is a trending stock that is worth watching.

What is CAE Inc stock price?

On 2024-12-06, CAE Inc (CAE-T) stock closed at a price of $33.28.