Tuesday saw RBC Capital adjust its price target for CAE Inc . (NYSE:CAE:CN) (NYSE: CAE), a leading provider of simulation and training services for aviation and defense, to C$31 from the previous target of C$34. The firm, however, continues to recommend an Outperform rating for the stock.
The revision follows CAE's fourth fiscal quarter results, which aligned with the company's pre-release on May 21. The company's recent financial disclosures included substantial goodwill write-downs, unfavorable contract adjustments, and impairment of intangible assets. These developments have shifted investor attention toward the company's performance against its guidance targets.
CAE's guidance suggests ongoing growth in its Civil segment and significant operating leverage in its Defense business. These factors contribute to what RBC Capital views as an attractive valuation, especially when considering the current share price. Nevertheless, the firm acknowledges the risks associated with executing the Defense segment's objectives and the potential for additional restructuring costs that could impact free cash flow (FCF).
InvestingPro Insights
In light of RBC Capital's revised price target and optimistic outlook for CAE Inc., real-time data and InvestingPro Tips offer additional context for investors considering the stock. CAE is currently trading at a P/E ratio of 24.1, suggesting a valuation that might be attractive relative to its near-term earnings growth potential. Additionally, the company's PEG ratio of 0.54 indicates that the stock could be undervalued based on expected earnings growth rates.
InvestingPro data shows that CAE's revenue saw a slight increase of 1.89% over the last twelve months as of Q4 2024, while the company maintained a solid gross profit margin of 26.96%. Despite recent price declines, with the stock trading near its 52-week low, analysts predict the company will be profitable this year, which is affirmed by the profitability over the last twelve months. It's noteworthy that CAE does not pay a dividend, which may influence the investment strategy for income-focused shareholders.
For investors looking for more comprehensive analysis, InvestingPro offers additional insights on CAE, including stock price volatility trends and in-depth financial metrics. Utilize coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover the full range of InvestingPro Tips to inform your investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.