CAE (CAE) AI Stock Analysis

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Positive Factors

Cash Flow Management

Management guided to a 150% conversion of earnings to free cash flow, which should help reduce net debt/EBITDA.

Defense Business Performance

CAE's defense business is on an upward trajectory with backlog doubling and positioned to benefit from increased Defense spending.

Leadership Change

CAE announced Mathew Bromberg will be the new President and CEO, bringing extensive experience from Northrop Grumman and Pratt and Whitney.

Negative Factors

Civil Aviation Challenges

The Civil aviation segment faces headwinds with a conservative outlook and concerns over slower pilot hiring and travel demand.

Delayed Aircraft Deliveries

Delayed aircraft deliveries in the US will slow training activity and simulator sales.

Supply Chain Disruptions

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.

CAE (CAE) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$8.53B

Dividend YieldN/A

Average Volume (3M)556.06K

Price to Earnings (P/E)29.4

Beta (1Y)0.86

Revenue GrowthN/A

EPS GrowthN/A

CountryUS

Employees13,000

SectorIndustrials

Sector Strength91

IndustryAerospace & Defense

Share Statistics

EPS (TTM)0.34

Shares Outstanding320,267,760

10 Day Avg. Volume538,398

30 Day Avg. Volume556,056

Financial Highlights & Ratios

PEG Ratio-1.55

Price to Book (P/B)2.49

Price to Sales (P/S)0.00

P/FCF Ratio32.90

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$28.68

Price Target Upside7.74% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering10

CAE Business Overview & Revenue Model

Company DescriptionCAE 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 Earnings Call Summary

Earnings Call Date:May 13, 2025

(Q4-2025)

% Change Since: 2.42%|

Next Earnings Date:Aug 06, 2025

Earnings Call Sentiment Positive

The earnings call reflects a strong financial performance with record free cash flow, significant backlog growth, and strong performance in both Civil and Defense segments. However, there are challenges in training center utilization and increased financial costs. Overall, the positive aspects significantly outweigh the challenges.

Q4-2025 Updates

Positive Updates

Record Free Cash Flow and Backlog

Generated $289 million in free cash flow in Q4 and a record $814 million for the full year, translating to a cash conversion rate of 211%. Achieved a record end of year adjusted backlog of $20.1 billion, up 65% from last year.

Strong Civil Aviation Segment Performance

Civil segment achieved a record adjusted segment operating margin of 28.6% in Q4 and 21.5% for the year. Backlog grew 37% to a record $8.8 billion, supported by $3.7 billion in new orders.

Defense Segment Growth

Defense segment accelerated its path to greater profitability with an adjusted segment operating income margin of 9.2% in Q4 and doubled the adjusted Defense backlog to $11.3 billion.

Revenue and Income Growth

Consolidated revenue increased 13% in Q4 and 10% for the year. Adjusted segment operating income was up 33% to $732 million, while annual adjusted net income was $385.5 million, up from $0.87 last year to $1.21 per share.

Negative Updates

Reduced Training Center Utilization

Average training center utilization was 75% in Q4, down from 78% due to a reduction in pilot hiring in Americas related to OEM aircraft supply constraints.

Increased Finance and Tax Expenses

Net finance expense rose to $56.5 million from $52.4 million in Q4 last year. Effective tax rate increased to 25% from 14% last year.

Company Guidance

During the CAE Fourth Quarter and Full Fiscal Year 2025 Conference Call, the company provided robust guidance for the upcoming fiscal year. CAE reported a record free cash flow of $814 million for the fiscal year, translating to a cash conversion rate of 211%. Civil aviation segment achieved a record adjusted segment operating margin of 28.6% in Q4 and 21.5% for the year. The defense segment showed significant improvement with an adjusted segment operating income margin of 9.2% in Q4. CAE's total consolidated revenue for the fiscal year increased by 10% to $4.7 billion, with an adjusted segment operating income up by 33% to $732 million. The company expects a mid to high single-digit percentage growth in segment operating income for Civil in fiscal 2026 and a low double-digit growth in Defense, with a continued focus on operational excellence and capital efficiency. The fiscal year 2026 will see a targeted free cash flow conversion rate of 150% and a reduction in net leverage to 2.5 times supported by sustained cash flow generation.

CAE Financial Statement Overview

Summary

CAE shows strong revenue growth and healthy gross margins, but profitability remains a concern with negative net margins. The balance sheet is stable, but high leverage requires careful debt management. Strong free cash flow indicates operational efficiency, though profitability challenges persist.

Income Statement

Positive

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

Positive

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

Positive

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.

TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Breakdown
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
160.10M	160.10M	217.60M	346.10M	926.10M	946.50M
	Total Assets
9.83B	9.83B	10.44B	9.58B	8.75B	8.48B
	Total Debt
3.15B	3.07B	3.25B	3.05B	2.35B	3.31B
	Net Debt
2.99B	2.91B	3.03B	2.70B	1.43B	2.37B
	Total Liabilities
5.53B	5.53B	5.85B	5.49B	5.54B	5.91B
	Stockholders Equity
4.22B	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 Peers Comparison

Overall Rating

UnderperformOutperform

Sector (66)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CAE		$8.53B	29.40	8.87%	―	―	―
MDA	80 Outperform	C$3.63B	36.41	8.54%	―	49.98%	108.76%
Sector *	66 Neutral	$4.51B	12.29	5.40%	248.53%	4.14%	-12.41%
BDRBF		$7.21B	26.62		―	―	―
MAL	78 Outperform	C$978.78M	24.47	5.12%	0.58%	8.59%	242.80%
FTG	75 Outperform	C$281.94M	20.89	17.82%	―	15.25%	48.96%
BBD.A	69 Neutral	C$9.86B	26.15	-23.10%	―	16.31%	4.12%

* Industrials Sector Average

Performance Comparison

CAE

26.62

8.51

46.99%

BDRBF

Bombardier

73.85

9.18

14.20%

TSE:BBD.A

Bombardier Cl A MV

100.72

11.94

13.45%

TSE:FTG

Firan Tech

11.20

5.73

104.75%

TSE:MAL

Magellan Aerospace

17.13

9.03

111.48%

TSE:MDA

MDA Ltd

29.60

17.59

146.46%

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.