Have an account? Please log in.
CAE INC. $9.67 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 257.2 million; Market cap: $2.5 billion; Price-to-sales ratio: 1.5; Dividend yield: 1.7%; TSINetwork Rating: Average; www.cae.com) makes military and airline flight simulators. It also runs pilot-training schools.
CAE continues to apply its simulator expertise to new fields, such as medical training. It recently bought Florida-based Medical Education Technologies, Inc. (METI), which makes medical simulators and other products, including life-like mannequins, for training paramedics and medical students.
Since 1996, METI has sold about 6,000 simulators to medical schools in 40 countries. This purchase will add $60 million U.S. to CAE’s annual revenue of $1.6 billion (Canadian).
CAE paid $130 million U.S. for METI. To finance this purchase, CAE sold $150 million U.S. of new long-term notes. On June 30, 2011, the company’s long-term debt was $533.3 million (Canadian), or 21% of its $2.5-billion market cap, so it has plenty of room to borrow more funds.
The company will probably earn $0.69 a share in its current fiscal year. The stock trades at a reasonable 14.0 times that estimate.
CAE is a buy.
All of our articles are available for republishing as long as you provide a link back to the original article.
In today's economy, it's more important than ever to have clear investment advice that is tailored to your own personal goals. This is where Pat McKeough's conservative safe-investing philosophy comes in. Through TSI Network, you get access to reports, monthly newsletters and premium services that go beyond the daily headlines to give you all the advice and information you need to build a portfolio with long-term growth potential. Simply click on the links below to discover which service is right for you.
TSI Premium Services