CAE Inc. (NYSE:CAE) is one of the best stocks for beginners with little money in 2026. On February 12, CAE released its FQ3 2026 earnings report, with total revenue reaching $1.25 billion, which was a 2% increase year-over-year. The standout performer was the Defense segment, which saw a 14% revenue jump and a 38% increase in adjusted operating income, driven by superior program execution and strategic partnerships with entities like Saab and the Australian Defense Force. In contrast, the Civil segment f ...

Core Viewpoint - CAE is currently viewed as a more attractive investment option compared to AeroVironment based on valuation metrics and earnings outlook [3][7]. Valuation Metrics - CAE has a forward P/E ratio of 34.66, while AeroVironment has a significantly higher forward P/E of 70.42 [5]. - The PEG ratio for CAE is 2.28, indicating a more favorable valuation relative to its expected earnings growth compared to AeroVironment's PEG ratio of 3.61 [5]. - CAE's P/B ratio stands at 2.58, which is lower than AeroVironment's P/B ratio of 2.76, suggesting that CAE may be undervalued relative to its book value [6]. Earnings Outlook - CAE is experiencing an improving earnings outlook, which enhances its attractiveness in the Zacks Rank model [7]. - CAE holds a Zacks Rank of 2 (Buy), indicating a stronger earnings estimate revision trend compared to AeroVironment's Zacks Rank of 3 (Hold) [3]. Value Grades - CAE has a Value grade of B, while AeroVironment has a Value grade of F, reflecting a significant difference in perceived value based on key financial metrics [6].

Group 1 - Scotiabank raised its price target on CAE Inc. to C$57 from C$49, maintaining an Outperform rating due to confidence in the company's strategic transformation and margin recovery [1] - CAE Inc. reported revenue of C$1.25 billion in Q3, up from C$1.22 billion year-over-year, indicating operational improvement and progress in its transformation plan [3] - The Defense division achieved an adjusted segment operating margin above 10% for the first time in over six years, while the Civil segment showed year-over-year softness [3] Group 2 - CAE Inc. completed a portfolio review identifying non-core assets that represent approximately 8% of revenue and plans to pursue divestitures where value accretion is clear [3] - The company intends to rationalize its commercial airline simulator fleet by removing roughly 10% of deployed units to improve utilization and returns, which may temper near-term revenue but is expected to enhance long-term profitability [3] - CAE Inc. designs and manufactures simulation and training technologies for airlines, aircraft manufacturers, and defense customers worldwide [4]

Core Insights - CAE Inc. is a global leader in training for civil aviation, defense, and healthcare sectors, providing simulation technologies and integrated training solutions [1] - The company faces competition from L3Harris Technologies and FlightSafety International in the simulation and training industry [1] Financial Performance - Jefferies maintained a "Hold" rating for CAE, adjusting its price target from C$34 to C$31, reflecting a cautious outlook based on current market conditions [2][6] - The stock price of CAE is currently $30.22, representing a 3.70% decrease, or $1.16, from previous levels, which aligns with Jefferies' revised price target [3][6] - CAE's market capitalization is approximately $9.72 billion, with a trading volume of 1,965,720 shares, indicating significant market presence and investor interest [5][6] Stock Performance - The stock's trading range today is between $30.16 and $32.78, showing some volatility [4] - Over the past year, CAE's stock has fluctuated between a high of $34.24 and a low of $20.36, indicating sensitivity to market dynamics and investor sentiment [4]

Key TakeawaysCanada launches a C$500 billion ($369 billion) defense strategy over the next decade, mandating that 70% of procurement go to domestic firms to create 125,000 jobs.AI investment faces a "Phase Two" bubble burst as software stocks drop 20% YTD and reports indicate 95% of organizations are seeing zero return on generative AI spending.EU High Representative Kaja Kallas warns that Russia’s greatest threat is gaining more through diplomatic negotiations than it achieved on the battlefield despite 1. ...

Core Insights - The company reported a solid third quarter for fiscal 2026, with defense performance offsetting weaker civil aviation activity [6] Financial Performance - Civil segment revenue declined 5% to CAD 717.2 million, with adjusted operating income falling 6% to CAD 141.8 million, resulting in a 19.8% margin [1] - Consolidated revenue rose 2% year over year to CAD 1.25 billion, with adjusted segment operating income increasing 3% to CAD 195.8 million, and adjusted earnings per share rising to CAD 0.34 from CAD 0.29 [5] - Defense revenue increased 14% to CAD 534.9 million, with adjusted operating income rising 38% to CAD 54 million, achieving a 10.1% margin [8] Debt and Cash Flow - Net debt at the end of the quarter was approximately $2.8 billion, with a net debt to adjusted EBITDA ratio of 2.3x, surpassing the previous goal of 2.5x [2] - Net cash flow from operating activities was CAD 407.6 million, while free cash flow was $411.3 million, slightly higher than the previous year [3] Transformation Plan - The company is undergoing a multi-phase transformation plan focused on portfolio sharpening, capital discipline, and operational performance improvement [6][12] - CAE has identified non-core assets representing about 8% of revenue for potential divestiture, with strategic alternatives being explored [13] - A shared services outsourcing initiative has been launched to modernize finance and HR processes, aiming for reduced administrative costs [15] Market Outlook - The outlook for civil aviation has softened, with expectations of a mid-single-digit percentage decline in annual adjusted segment operating income, while defense adjusted segment operating income growth is raised to over 20% year over year [9][11] - Training center utilization decreased to 71% from 76% a year earlier, with plans to rationalize the simulator network to improve capacity and utilization [7][14] Recent Developments - Recent program wins include a partnership with Saab on the GlobalEye platform and a contract for Australia's Future Air Mission Training System valued at over $270 million [16] - The company had a successful Singapore Airshow, signing agreements totaling more than $160 million [16] - Leadership changes include the appointment of Ryan McLeod as CFO, with the evaluation phase of the transformation plan expected to be completed by May [17]

Financial Data and Key Metrics Changes - Consolidated revenue for Q3 was CAD 1.25 billion, a 2% increase year-over-year [16] - Adjusted Segment Operating Income rose to CAD 195.8 million, up 3% from CAD 190 million in the same quarter last year [16] - Adjusted EPS increased to CAD 0.34, compared to CAD 0.29 a year ago [16] - Net finance expense decreased to CAD 54.1 million from CAD 56.6 million in the previous year [17] - Free cash flow was CAD 411.3 million, slightly above CAD 409.8 million recorded in the same quarter last year [18] - Capital expenditures totaled CAD 50.6 million, with expectations for full-year CapEx to be over 10% lower than last year [18] Business Line Data and Key Metrics Changes - In the Civil segment, revenue decreased by 5% year-over-year to CAD 717.2 million, with adjusted operating income down 6% to CAD 141.8 million [19] - Training Center Utilization in the Civil segment was 71%, down from 76% in the prior year [20] - In the Defense segment, revenue increased by 14% year-over-year to CAD 534.9 million, with adjusted operating income up 38% to CAD 54 million, achieving a margin of 10.1% [20] Market Data and Key Metrics Changes - The civil aviation market is expected to grow at 4%-5% annually over the long term, despite current disruptions [52] - Defense spending is projected to grow significantly, with Canada committing CAD 82 billion over the next five years [33] Company Strategy and Development Direction - The company is implementing a multi-pronged transformation plan focusing on portfolio sharpening, disciplined capital management, and operational excellence [5][12] - The transformation plan aims to improve margins, cash flow, and returns on investment, with specific targets to be shared in the next quarter [7][35] - The company is rationalizing its civil training network to align capacity with current demand, which may impact near-term revenue [30][39] Management's Comments on Operating Environment and Future Outlook - Management acknowledges near-term revenue impacts from the transformation plan but believes it will lead to stronger long-term performance [8][34] - The defense segment is expected to see over 20% growth in adjusted segment operating income year-over-year, reflecting a favorable market environment [32] - The company is confident in its long-term growth prospects in both civil and defense markets, supported by strong fundamentals [46] Other Important Information - The company has identified non-core assets representing approximately 8% of revenue for potential divestiture [36] - Recent leadership changes include the appointment of Ryan McLeod as Chief Financial Officer, expected to enhance operational finance and capital discipline [13] Q&A Session Questions and Answers Question: Long-term perspective on civil business returns - Management indicated that the civil business could generate solid mid-teen returns over the long term, with a focus on improving utilization and profitability [50][54] Question: Conversations with civil customers regarding network rationalization - Initial conversations with civil customers have been positive, focusing on resizing the network to meet current demand [58][60] Question: Nature of identified non-core assets - Non-core assets are present in both civil and defense segments, and the company is focused on finding suitable buyers for these businesses [66][67] Question: Outlook for civil aviation training demand - Management noted that while current demand is softer than expected, the long-term growth trajectory remains strong at 4%-5% [72][74] Question: Timing of potential divestitures - The company is moving cautiously through the divestiture process, with a timeline of 18-24 months for completion [75][76] Question: Defense segment margin improvements - The defense segment's margin improvements are attributed to better contract mix and cost controls, with expectations for continued growth [80]

Financial Data and Key Metrics Changes - Consolidated revenue for Q3 was CAD 1.25 billion, a 2% increase year-over-year [16] - Adjusted Segment Operating Income rose to CAD 195.8 million, up 3% from CAD 190 million in the same quarter last year [16] - Adjusted EPS increased to CAD 0.34, compared to CAD 0.29 a year ago [16] - Net finance expense decreased to CAD 54.1 million from CAD 56.6 million in the previous year [17] - Free cash flow was CAD 411.3 million, slightly above CAD 409.8 million recorded in the same quarter last year [18] - Capital expenditures totaled CAD 50.6 million, with expectations for full-year CapEx to be over 10% lower than last year [18] Business Line Data and Key Metrics Changes - In the civil segment, revenue decreased by 5% year-over-year to CAD 717.2 million, with adjusted operating income down 6% to CAD 141.8 million [19] - Training Center Utilization in the civil segment was 71%, down from 76% in the prior year [20] - In the defense segment, revenue increased by 14% year-over-year to CAD 534.9 million, with adjusted segment operating income rising 38% to CAD 54 million, achieving a margin of 10.1% [20] Market Data and Key Metrics Changes - The civil aviation market is expected to grow at 4%-5% annually over the long term, despite current disruptions [52] - The defense segment is also projected to grow at a similar rate, supported by increased defense spending across allied nations [32] Company Strategy and Development Direction - The company is implementing a multi-pronged transformation plan focusing on portfolio sharpening, disciplined capital management, and operational excellence [5][12] - The transformation plan aims to improve margins, cash flow, and returns on investment, with specific targets to be shared in the next quarter [7][35] - The company is rationalizing its civil training network to align capacity with current demand, which may have a near-term revenue impact [30][39] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the softness in the civil business but remains optimistic about the defense segment's performance [5][30] - The company expects the fourth quarter to be the strongest of the year in the civil segment, despite a mid-single-digit percentage decline in annual adjusted segment operating income [30] - Long-term fundamentals in aviation remain strong, with significant backlogs reported by major OEMs [31][32] Other Important Information - The company has identified non-core assets representing approximately 8% of revenue for potential divestiture [36] - Recent leadership changes include the appointment of Ryan McLeod as Chief Financial Officer, expected to enhance operational finance and capital discipline [13] Q&A Session Summary Question: Long-term perspective on civil business returns - Management indicated that the civil business could generate solid mid-teen returns over the long term, with a focus on improving utilization and profitability [50][54] Question: Conversations with civil customers regarding network rationalization - Initial conversations with civil customers have been positive, focusing on resizing the network to meet current demand [58][59] Question: Nature of identified non-core assets - Non-core assets are present in both civil and defense segments, with the intention to divest those that do not align with the company's strategic focus [66] Question: Outlook for civil aviation training demand - Management noted that while current demand is softer than expected, the long-term growth trajectory remains at 4%-5% annually [72][74] Question: Timing of potential divestitures - Management emphasized a cautious approach to divestitures, indicating that the process could take 18-24 months [75][76] Question: Defense segment margin improvements - The defense segment's margin improvements are attributed to better contract mix and cost controls, with expectations for continued growth [80]

Financial Data and Key Metrics Changes - Consolidated revenue for Q3 was CAD 1.25 billion, a 2% increase year-over-year [14] - Adjusted Segment Operating Income rose to CAD 195.8 million, up 3% from CAD 190 million in the same quarter last year [14] - Adjusted EPS increased to CAD 0.34, compared to CAD 0.29 a year ago [14] - Net finance expense decreased to CAD 54.1 million from CAD 56.6 million in the previous year [15] - Free cash flow was CAD 411.3 million, slightly above CAD 409.8 million recorded in the same quarter last year [17] - Capital expenditures totaled CAD 50.6 million, with expectations for full-year CapEx to be over 10% lower than last year [17] Business Line Data and Key Metrics Changes - In the civil segment, Q3 revenue decreased by 5% year-over-year to CAD 717.2 million, with adjusted operating income down 6% to CAD 141.8 million [18] - Defense segment revenue increased by 14% year-over-year to CAD 534.9 million, with adjusted operating income up 38% to CAD 54 million, achieving a margin of 10.1% [19] Market Data and Key Metrics Changes - The civil aviation market is expected to grow at 4%-5% annually over the long term, despite current softness [29] - Defense spending is projected to grow significantly, with Canada committing CAD 82 billion over the next five years [33] Company Strategy and Development Direction - The company is implementing a multi-pronged transformation plan focusing on portfolio sharpening, disciplined capital management, and operational excellence [4][5] - The transformation plan aims to increase earnings and cash flow while creating long-term sustainable value [5] - The company is rationalizing its civil training network to align capacity with current demand and improve utilization [30][39] Management's Comments on Operating Environment and Future Outlook - Management acknowledges near-term revenue impacts from transformation actions but believes these are necessary for long-term resilience and returns [6] - The defense segment is expected to see adjusted segment operating income growth of over 20% year-over-year, surpassing previous guidance [32] - The company anticipates the fourth quarter to be the strongest of the year in the civil segment, despite a mid-single-digit percentage decline in annual adjusted segment operating income [29] Other Important Information - The company has identified non-core assets representing approximately 8% of revenue for potential divestiture [36] - Recent leadership changes include the appointment of Ryan McLeod as Chief Financial Officer, expected to enhance operational finance and transformation execution [12] Q&A Session Summary Question: Long-term perspective on civil business returns - Management indicated that the civil business could generate solid mid-teen returns over the next few years, with a focus on improving utilization and profitability [50][53] Question: Conversations with civil customers regarding network rationalization - Initial conversations with civil customers have been positive, focusing on resizing the network to meet current demand [59][60] Question: Nature of identified non-core assets - Non-core assets are present in both civil and defense segments, and the company is focused on ensuring these businesses perform better under different ownership [67] Question: Outlook for civil aviation training demand - Management noted that while current demand is softer than expected, the long-term growth trajectory remains strong at 4%-5% [72][74] Question: Defense margins and contract performance - Defense margins improved due to a favorable contract mix and cost control measures, with expectations for continued margin expansion [78][80]

Core Insights - CAE reported revenue of $898.18 million for the quarter ended December 2025, marking a year-over-year increase of 2.7% and an EPS of $0.24 compared to $0.21 a year ago [1] - The reported revenue fell short of the Zacks Consensus Estimate of $904.94 million, resulting in a surprise of -0.75%, while the EPS exceeded expectations by 11.37% against a consensus estimate of $0.22 [1] Financial Performance - CAE's shares have returned -4.1% over the past month, contrasting with the Zacks S&P 500 composite's -0.3% change, indicating underperformance relative to the broader market [3] - The company holds a Zacks Rank 2 (Buy), suggesting potential for outperformance in the near term [3] Civil Aviation Metrics - Simulator equivalent units (SEU) stood at 305, surpassing the average estimate of 301 based on eight analysts [4] - Full Flight Simulator (FFS) deliveries were 15, slightly below the average estimate of 16 from seven analysts [4] - The utilization rate for Civil Aviation was reported at 71%, aligning closely with the average estimate of 71.7% from six analysts [4] - The number of FFSs in CAE's network reached 373, slightly above the average estimate of 372 from four analysts [4]