CAE Reports Strong Quarterly Results in 2Q16



CAE’s price movement

CAE (CAE) has a market capitalization of $3.0 billion. CAE’s YTD (year-to-date) price movement has been a mix of rises and falls in 2015.

After its 2Q16 earnings report, CAE fell by 2.9% to close at $11.07 per share as of November 11, 2015. The stock’s price movements on a weekly, monthly, and YTD basis are -3.8%, -1.4%, and -13.6%, respectively.

CAE’s stock has broken the support of its 20-day, 50-day, and 200-day moving averages throughout 2015. Currently, it’s trading at -2.5% below its 20-day moving average, 1.0% above its 50-day moving average, and -4.5% below its 200-day moving average.

Article continues below advertisement

The PowerShares S&P International Developed Low Volatility (IDLV) invests 0.41% of its holdings in CAE. The ETF tracks an index of about 200 stocks showing low price volatility pulled from the S&P Developed Ex-US and South Korea LargeMidCap BMI Index. The YTD price movement of IDLV is -4.1%, as of November 10, 2015.

CAE’s competitors and their market capitalizations are as follows:

  • Lockheed Martin (LMT) — $66.1 billion
  • L-3 Communications Holdings (LLL) — $9.4 billion
  • Embraer (ERJ) — $5.4 billion

Performance of CAE in 2Q16

The company reported revenue of 616.8 million Canadian dollars in 2Q16, a rise of 10.7% when compared to its revenue of 557.0 million Canadian dollars in 1Q16.

Revenue from CAE’s Civil Aviation Training Solutions, Defense and Security, and Healthcare segments rose by 8.6%, 14.9%, and 6.3%, respectively, in 2Q16, on a quarterly basis. Backlog orders of Civil Aviation Training Solutions and Defense and Security rose by 7.7% and 27.8%, respectively, in 2Q16 on a quarterly basis.

Article continues below advertisement

CAE’s cost of sales as a percentage of sales rose by 4.2% in 2Q16 on a quarterly basis. The company’s net income and EPS (earnings per share) rose to 69.2 million Canadian dollars and 0.26 Canadian dollars per share, respectively, in 2Q16 as compared to its net income and EPS of 44.5 million Canadian dollars and 0.17 Canadian dollars per share, respectively, in 1Q16.

CAE’s cash and cash equivalents and accounts receivable rose by 32.6% and 4.1%, respectively, in 2Q16 on a quarterly basis. Its current ratio and debt-to-equity ratio fell to 1.40 and 1.65, respectively, in 2Q16 as compared to its current and debt-to-equity ratios of 1.53 and 1.66, respectively, in 1Q16.

In 2Q16, some of the CAE’s key activities were as follows:

  • CAE sold its mining division to Constellation Software, a provider of software and services.
  • CAE was awarded with an airline training solution contract valued at more than 115 million Canadian dollars and defense contracts valued at more than 120 million Canadian dollars to provide simulation products, operational systems, and training services for global military customers.
  • It signed an exclusive rights agreement to distribute the Strategic Operations (STOPS) Surgical Cut Suit and other simulation training products in all parts of the world outside the United States.

On October 1, 2015, CAE completed the acquisition of Bombardier’s Military Aviation Training business for 19.8 million Canadian dollars.

About CAE

CAE provides training solutions based on simulation technology and integrated training services. It is involved in Civil Aviation, Defense and Security, and Healthcare businesses.


More From Market Realist