Product mix strengthens CAE’s outlook

Article Excerpt

CAE INC. $12 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 253.9 million; Market cap: $3.0 billion; SI Rating: Average) is a leading supplier of flight simulators to commercial airlines and the military forces of more than 35 countries. Through 24 training facilities equipped with over 115 flight simulators, CAE trains more than 50,000 pilots a year. Diverse clientele tempers CAE’s risk CAE’s exposure to the cyclical airline business adds risk. However, the company now gets about half of its revenue from commercial clients, and half from military customers. As well, training services give CAE steady, recurring revenues. That cuts its reliance on new products for growth. Services and products each account for roughly half of CAE’s total revenue. Revenue fell from $1.1 billion in fiscal 2003 (fiscal years end March 31) to $986.2 million in 2005 after CAE sold its non-aviation operations as part of major restructuring. Revenue grew to $1.25 billion in 2007, and should reach $1.4…