CAE (CAE) AI Stock Analysis

• Market Cap: C$13.17B
• Dividend Yield: N/A
• Average Volume (3M): 932.39K
• Price to Earnings (P/E): 34.9
• Beta (1Y): 1.13
• Revenue Growth: 9.12%
• EPS Growth: N/A
• Country: CA
• Employees: 13,000
• Sector: Industrials
• Sector Strength: 72
• Industry: Aerospace & Defense
• EPS (TTM): 0.34
• Shares Outstanding: 321,805,270
• 10 Day Avg. Volume: 1,109,985
• 30 Day Avg. Volume: 932,388
• PEG Ratio: -0.12
• Price to Book (P/B): 2.31
• Price to Sales (P/S): 2.40
• P/FCF Ratio: 24.95
• 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$48.33
• Price Target Upside: 18.13% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 8
• EPS Forecast (FY): 1.2
• Revenue Forecast (FY): C$4.90B

• Rating: 57 Neutral
• Price Target: C$43.00 ▲(5.11% Upside)
• Action: Downgraded Date: 02/18/26
• Date: Action: Downgraded 02/18/26

The score is driven primarily by improving financial performance (revenue acceleration and profitability recovery, with better leverage) but tempered by inconsistent cash conversion and only moderate returns. Technical indicators are a meaningful headwind (weak trend/momentum), while valuation is on the expensive side with a high P/E and no dividend support. Earnings call commentary was moderately positive due to strong free cash flow and backlog, but Civil segment challenges and lighter order activity limit the upside.

Positive Factors

Large, growing backlog

A multi‑billion backlog across Civil and Defense provides durable revenue visibility and underpins multi‑year service delivery. Backlog conversion supports recurring training revenues and aftermarket work, reducing near‑term top‑line risk and supporting capacity planning over the next several quarters.

Defense segment strength

Strong Defense growth and materially higher segment operating income reflect durable government contract demand and higher‑margin program execution. Defense contracts are typically multi‑year and less cyclical, improving earnings stability and cash visibility compared with Civil exposure.

Improving cash generation and profitability

A sharp rise in free cash flow alongside revenue growth signals improving conversion of operations into cash. Stronger FCF supports debt reduction targets, funds reinvestment and cushions cyclical pressure, making the company more able to execute its transformation and capital‑discipline initiatives.

Negative Factors

Civil segment challenges & utilization decline

Lower utilization and a drop in Civil operating income indicate weaker capacity monetization and pricing pressure in the commercial training market. Because Civil drives simulator sales and recurring training, sustained soft demand or slow utilization recovery would compress margins and delay conversion of backlog to profitable revenue.

Weaker cash conversion

Persistent gaps between accounting earnings and cash indicate working‑capital and investment absorption. If cash conversion remains subdued, the business will have less flexibility to deleverage, invest in simulators or expand training capacity, making targets like lower net debt/EBITDA harder to sustain.

Sizable absolute debt and only moderate returns

While leverage ratios are manageable, the large absolute debt load combined with moderate ROE limits financial cushion and strategic optionality. In a downcycle or with rising finance costs, interest expense and refinancing needs could strain earnings and constrain investments or acquisition opportunities.

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 primarily through the sale of simulation products and training services. Its revenue model includes three key streams: Civil Aviation, Defense and Security, and Healthcare. In Civil Aviation, CAE earns money through pilot training services, simulation equipment sales, and maintenance contracts. In the Defense sector, the company provides military training solutions, simulation systems, and ongoing support services. The Healthcare division focuses on providing medical simulation and training solutions to hospitals and educational institutions. CAE also engages in long-term partnerships with airlines and military organizations, which contribute to stable, recurring revenue through training contracts and service agreements. Furthermore, the company invests in research and development to innovate its product offerings, ensuring it stays competitive and meets the evolving needs of its customers.

CAE Financial Statement Overview

Summary

Fundamentals are improving, led by sharp TTM revenue growth and a turnaround back to profitability, with leverage metrics trending better. Offsetting this are only moderate returns on equity and weaker cash conversion (free cash flow notably below net income), plus a recent history of margin/earnings volatility.

Income Statement

Profitability and growth have improved meaningfully. TTM (Trailing-Twelve-Months) revenue rose sharply (about +59% vs the latest annual period), with solid profitability (about 28% gross margin and ~9% net margin) and healthy operating earnings margins. Results also show a clear turnaround from the FY2024 loss to positive earnings in FY2025/TTM. Offsetting this, margins have been somewhat volatile over the multi-year period (including a net loss in FY2024), which suggests earnings can still be sensitive to cycle/one-offs.

Balance Sheet

Leverage looks manageable for the industry, with debt-to-equity around ~0.66 in TTM (Trailing-Twelve-Months), improving from ~0.71 in FY2025 and below prior-year levels. Equity has grown versus earlier years, supporting balance-sheet resilience. However, absolute debt remains sizable (~3.25B), and returns on equity are moderate (TTM ~8.9%), indicating the capital base is not yet producing top-tier returns and leaving less cushion if profitability weakens.

Cash Flow

Cash generation is positive, with TTM (Trailing-Twelve-Months) operating cash flow (~879M) and free cash flow (~496M) both solid, and free cash flow improving strongly versus FY2025. That said, cash conversion remains a key watch item: operating cash flow is meaningfully lower than revenue scale, and free cash flow is only about half of net income in TTM (Trailing-Twelve-Months), suggesting working-capital/investment demands can dampen how much accounting profit turns into cash.

Breakdown	TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement
Total Revenue	4.86B	4.71B	4.28B	4.01B	3.37B	2.98B
Gross Profit	1.38B	1.30B	1.15B	1.08B	955.50M	765.00M
EBITDA	1.06B	915.70M	785.70M	693.60M	552.30M	446.90M
Net Income	375.90M	405.30M	-304.00M	222.70M	141.70M	-47.20M
Balance Sheet
Total Assets	11.03B	11.21B	9.83B	10.44B	9.58B	8.75B
Cash, Cash Equivalents and Short-Term Investments	463.70M	293.70M	160.10M	217.60M	346.10M	926.10M
Total Debt	3.25B	3.47B	3.07B	3.49B	3.05B	2.35B
Total Liabilities	5.78B	6.24B	5.53B	5.85B	5.49B	5.54B
Stockholders Equity	5.17B	4.89B	4.22B	4.51B	4.01B	3.14B
Cash Flow
Free Cash Flow	496.44M	452.40M	126.30M	-16.90M	55.40M	203.00M
Operating Cash Flow	878.63M	896.50M	566.90M	408.40M	418.20M	366.60M
Investing Cash Flow	-377.90M	-732.30M	-215.40M	-400.70M	-2.24B	-343.40M
Financing Cash Flow	-344.37M	-49.80M	-395.30M	-152.60M	1.26B	-21.30M

CAE Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 40.91
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• 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 40.91 is below the 20-day moving average (MA) of 41.76, below the 50-day MA of 43.19, and above the 200-day MA of 39.35, indicating a neutral trend. The MACD of -0.93 indicates Positive momentum. The RSI at 39.84 is Neutral, neither overbought nor oversold. The STOCH value of 29.35 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
FTG	74 Outperform	C$525.87M	40.11	17.40%	―	15.09%	31.55%
MAL	72 Outperform	C$1.42B	31.28	5.64%	0.93%	8.84%	131.58%
MDA	70 Outperform	C$5.31B	47.19	8.88%	―	57.77%	57.55%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
BBD.B	61 Neutral	C$27.39B	20.80	―	―	6.60%	-1.71%
BBD.A	60 Neutral	C$27.39B	20.82	―	―	6.60%	-1.71%
CAE	57 Neutral	C$13.17B	34.89	7.63%	―	9.12%	―

CAE Corporate Events

CAE advances transformation as Defense strength offsets Civil softness in Q3

CAE reported third quarter fiscal 2026 revenue of $1.25 billion, up 2% year over year, while earnings per share declined to $0.34 from $0.53 as last year’s results benefited from a significant one-time gain. Adjusted EPS rose 17% to $0.34, net income fell 35% to $108.9 million, and adjusted segment operating income margin held essentially flat at 15.6%, as the company also cut its net debt-to-adjusted EBITDA ratio to 2.30x, ahead of its deleveraging goal.

The company is advancing a broad transformation plan, including divestiture of non-core assets representing about 8% of revenue and optimization of its Civil training network by reducing and relocating roughly 10% of commercial airline simulators, steps expected to temporarily pressure revenue but improve utilization, returns, and resilience over time. A weaker near-term outlook in Civil is largely offset by stronger performance and margins above 10% in Defense, leaving CAE’s full-year expectations broadly unchanged and signaling a gradual rebalancing of its portfolio toward higher-return segments.

The most recent analyst rating on (TSE:CAE) stock is a Hold with a C$47.00 price target. To see the full list of analyst forecasts on CAE stock, see the TSE:CAE Stock Forecast page.

CAE names former ATS finance chief Ryan McLeod as new CFO

CAE Inc. has appointed Ryan McLeod as Chief Financial Officer, effective February 23, 2026, following a comprehensive search process and an interim period under CFO Constantino Malatesta. McLeod, who brings extensive experience from his tenure as CFO of ATS Corporation, where he oversaw significant revenue growth, margin expansion, a U.S. IPO, and numerous strategic acquisitions, will lead CAE’s global finance organization and help drive strategic growth, operational excellence and investor engagement as the company pursues its priorities in civil aviation and defence and security markets.

The most recent analyst rating on (TSE:CAE) stock is a Hold with a C$51.00 price target. To see the full list of analyst forecasts on CAE stock, see the TSE:CAE Stock Forecast page.