Is CAE Stock Undervalued or Overvalued Today?

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By Rob Otman

CAE (NYSE: CAE) is a midcap company that operates within the aerospace and defense industry. Its market cap is $5 billion today, and the total one-year return is 31.38% for shareholders.

CAE stock is beating the market, and it just beat earnings estimates. But does that make it a good buy today? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.

Our system looks at six key metrics…

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✗ Earnings-per-Share (EPS) Growth: CAE reported a recent EPS growth rate of 8.7%. That’s below the aerospace and defense industry average of 22.28%. That’s not a good sign. We like to see companies that have higher earnings growth.

✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the defense and aerospace industry is 64.05. And CAE’s ratio comes in at 21.72. It’s trading at a better value than many of its competitors.

✓ Debt-to-Equity: The debt-to-equity ratio for CAE stock is 60.33%. That’s below the aerospace and defense average of 78.17%. The company is less leveraged.

✓ Free Cash Flow per Share Growth: CAE’s FCF has been higher than that of its competitors over the last year. That’s good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.

✓ Profit Margins: The profit margin of CAE comes in at 9.08% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. CAE’s profit margin is above the aerospace and defense average of 3.75%. So that’s a positive indicator for investors.

✓ Return on Equity: Return on equity tells us how much profit a company produces with the money shareholders invest. The ROE for CAE is 12.87%, and that’s above its industry average ROE of 9.43%.

CAE stock passes five of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Strong Buy.

Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth. For more details, click here. …read more

Source:: Investment You

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