Evaluating CAE (TSX:CAE)’s Valuation After New Air Traffic Training Partnership and CAE Ridge 3D Rollout

CAE (TSX:CAE) just doubled down on air traffic training by partnering with ANS CR in Europe and rolling out its CAE Ridge 3D tool, moves that quietly deepen its moat in high value simulation.

See our latest analysis for CAE.

Those training wins seem to be resonating with investors, with the share price now at $38.93 and a solid year to date share price return alongside a strong multi year total shareholder return. This suggests momentum is quietly rebuilding around CAE's long term growth story.

If CAE's push into next generation training has your attention, this could be a good moment to explore similar opportunities across aerospace and defense using our aerospace and defense stocks.

With earnings climbing faster than revenue and the stock still trading at a notable discount to both analysts’ targets and intrinsic value estimates, is CAE a quiet buy on future-ready training, or is the market already pricing in that growth?

Most Popular Narrative Narrative: 10.6% Undervalued

With CAE closing at CA$38.93 against a narrative fair value of about CA$43.54, the market is being asked to believe in steadily compounding earnings power.

Strategic program execution and operational discipline, highlighted by focus on optimizing recently built capacity, driving cost efficiencies, and replacing lower margin legacy defense contracts with accretive ones, should translate into stronger margin performance, improved cash conversion, and higher returns on invested capital over time.

Read the complete narrative.

Curious what kind of revenue runway and margin uplift could justify paying a premium multiple years from now, and how disciplined growth assumptions turn into that fair value? The full narrative unpacks the forecasts behind those expectations, and the exact earnings step up it thinks CAE can deliver to close that gap.

Result: Fair Value of $43.54 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, elevated debt and softer civil aviation training demand could constrain flexibility and delay the margin and earnings lift that this narrative is banking on.

Find out about the key risks to this CAE narrative.

Another Angle on Valuation

While the narrative fair value suggests CAE is 10.6% undervalued, our SWS DCF model is far more optimistic. It implies the shares trade about 40.9% below intrinsic value at roughly CA$65.9. Is the market underestimating long term cash generation, or is the model too generous on margins and growth?

Look into how the SWS DCF model arrives at its fair value.

Build Your Own CAE Narrative

If you see the story differently or want to dig into the numbers yourself, you can build a custom view in just minutes: Do it your way.

A great starting point for your CAE research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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