CAE CN
CAE Inc
Industrial/Transportation
02/21/2021
Presented
| Date | 02/17/2021 |
| Price | CA$31.71 |
| Market Cap | $7.17B |
| Ent Value | $9.21B |
| P/E Ratio | 825.78x |
| Book Value | CA$9.84 |
| Div Yield | 0.35% |
| Shares O/S | 282.81M |
| Ave Daily Vol | 768,970 |
| Short Int | N/A |
Current
| Price | CA$25.59 |
| Market Cap | $6.52B |
| CAE, Inc. engages in the provision of digital immersion and training services for the civil aviation, defense and security, and healthcare markets. It operates through the following segments: Civil Aviation Training Solutions, Defense and Security, and Healthcare. The Civil Aviation Training Solutions segment focuses on aviation professionals, airlines, business aviation operators, and aircraft manufacturers. The Defense and Security segment offers a portfolio of training centers, training services, and simulation products across the air, land, naval, and public safety market. The Healthcare segment includes patient simulation, interventional and imaging simulation, center management solutions, and learning modules. The company was founded by Kenneth R. Patrick in 1947 and is headquartered in Saint-Laurent, Canada. |
Publicly traded companies mentioned herein: Boeing Co/The (BA), CAE Inc (CAE CN), L3Harris Technologies Inc (LHX)
Highlights
The presenter is long shares of CAE Inc (CAE CN), a Canadian company that sells flight simulator equipment and operates a flight training network. CAE consists of three segments: Civil Aviation Training Solutions (60% of revenue; i.e., the commercial business), Defence and Security (37%), and Healthcare (3%). CAE is currently the presenter’s top aerospace stock based on his bullishness on the commercial business, which he thinks has significant earnings power that is not priced in at the ~C$31.50 share price. The company generated C$1.34 of EPS in FY2020 (ended March 31st, 2020), and he thinks that can improve to C$1.80 – C$2.00 in FY2024 through ongoing cost rationalization and the impact of three recent acquisitions. CAE trades at 33x forward consensus EPS, and he applies a 20x – 25x earnings multiple to his FY2024 EPS estimate to reach a base case of ~C$43 per share. However, this represents just the earnings power of CAE’s low hanging fruit. The presenter also expects market share gains in its training network, which he believes could drive CAE’s FY2024 EPS to C$2 – C$2.50. In addition, he identifies several bull case opportunities that would provide incremental upside but are not necessary for the stock to appreciate, such as massive pilot turnover, CAE’s small healthcare business, and an FAA mandate that would require new simulators for BA’s 737 MAX.
◆Signing up and creating account with us unlocks this content for you. Contact us today for full access to DeMatteo Research and more.
◆Signing up and creating account with us unlocks this content for you. Contact us today for full access to DeMatteo Research and more.