Q: What are views of this company? Any future in the increasing Canadian defence spending?
5i Research Answer:
With NATO and allied defense budgets increasing, we could see demand for CAEs products rise. It is a $13B name, with a moderate 5.4% sales and earnings five-year CAGR, but future earnings growth is expected to be stronger, in the 15%+ range. Price momentum has been strong recently, and it is nearing a new all-time high. It trades at a forward valuation of 30X earnings, margin expansion has been decent, it generates good free cash flows, and it is paying down debt. With the increased in Canadian defense spending, we think it looks fairly interesting here.