Tuesday, December 20, 2016

CAE Taking Aim At Much Larger Markets

CAE (NYSE:CAE) has had a good year, even though this is one of the relatively few companies I've looked at recently that has had a big post-election run. Already a leader in simulators and training across most categories of civilian and military aircraft, CAE is looking to continue a pivot toward more training and service that has been underway for more than a decade and that offers substantially greater addressable revenue to the company.

Valuation is interesting. The shares are pricing in double-digit long-term annualized free cash flow growth, but I don't think that is unreasonable. Likewise, with EBITDA. I'd be careful chasing a late-cycle aviation play, but should the market correct (or just the aerospace sector), I'd come back to this name as an interesting long-term play on aviation growth (particularly civil aviation).

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CAE Taking Aim At Much Larger Markets

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