Comparing CAE (CAE) and Arotech (ARTX)

Arotech (NASDAQ: ARTX) and CAE (NYSE:CAE) are both aerospace companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, risk, valuation, profitability and institutional ownership.

Analyst Recommendations

This is a summary of current recommendations for Arotech and CAE, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Arotech 0 0 1 0 3.00
CAE 0 1 2 0 2.67

Arotech presently has a consensus price target of $4.50, suggesting a potential upside of 20.00%. CAE has a consensus price target of $22.00, suggesting a potential upside of 9.73%. Given Arotech’s stronger consensus rating and higher possible upside, analysts clearly believe Arotech is more favorable than CAE.

Earnings & Valuation

This table compares Arotech and CAE’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Arotech $98.72 million 1.01 $3.83 million $0.16 23.44
CAE $2.21 billion 2.43 $270.72 million $0.87 23.05

CAE has higher revenue and earnings than Arotech. CAE is trading at a lower price-to-earnings ratio than Arotech, indicating that it is currently the more affordable of the two stocks.

Dividends

CAE pays an annual dividend of $0.28 per share and has a dividend yield of 1.4%. Arotech does not pay a dividend. CAE pays out 32.2% of its earnings in the form of a dividend. CAE has raised its dividend for 2 consecutive years.

Risk & Volatility

Arotech has a beta of 1.33, meaning that its stock price is 33% more volatile than the S&P 500. Comparatively, CAE has a beta of 0.79, meaning that its stock price is 21% less volatile than the S&P 500.

Profitability

This table compares Arotech and CAE’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Arotech 5.02% 7.56% 4.61%
CAE 12.30% 13.53% 5.48%

Institutional and Insider Ownership

24.0% of Arotech shares are owned by institutional investors. Comparatively, 50.3% of CAE shares are owned by institutional investors. 9.4% of Arotech shares are owned by insiders. Comparatively, 18.3% of CAE shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

CAE beats Arotech on 13 of the 17 factors compared between the two stocks.

About Arotech

Arotech Corporation provides defense and security products worldwide. The company's Training and Simulation division develops, manufactures, and markets multimedia and interactive digital solutions for engineering, use-of-force training, and operator training of military, law enforcement, security, emergency services, and other personnel. This division offers simulators, systems engineering support, and software products for training vehicle operators to the United States military, government, municipalities, and private industry; weapon simulations used to train military pilots, weapon employment information used in air launched weapons, and part-task simulators to train aircrew; specialized use-of-force training simulators and systems for police, security personnel, and the military under the MILO Range trade name; and consulting and development support services under the Realtime Technologies trade name. Its Power Systems division provides electronics engineering and design, system integration, rapid prototyping, and vertically production services for military, aerospace, and industrial customers, including hybrid power generation systems, smart power subsystems for military vehicles and dismounted applications, and aircraft and missile systems support for weapons and communications technologies. This division also develops and sells rechargeable and primary batteries, and smart chargers to the military and medical markets, and to private defense industry under the Epsilor name. In addition, it develops, manufactures, and markets primary batteries, rechargeable batteries, and battery chargers for the military; and produces water-activated lifejacket lights for commercial aviation and marine applications under the Electric Fuel name. The company was formerly known as Electric Fuel Corporation and changed its name to Arotech Corporation in September 2003. The company was founded in 1990 and is based in Ann Arbor, Michigan.

About CAE

CAE Inc., together with its subsidiaries, designs, manufactures, and supplies simulation equipment worldwide. It operates in three segments: Civil Aviation Training Solutions, Defence and Security, and Healthcare. The Civil Aviation Training Solutions segment provides training solutions for flight, cabin, maintenance, and ground personnel in commercial, business, and helicopter aviation; flight simulation training devices; and ab initio pilot training and crew sourcing services. The Defence and Security segment operates as a training systems integrator for defense forces in the air, land, and naval domains, as well as for government organizations responsible for public safety. The Healthcare segment designs, manufactures, and markets simulators; offers audiovisual and simulation center management solutions; and develops courseware and offers services for training of medical and allied healthcare students, as well as clinicians in educational institutions, hospitals, and defense organizations. The company was formerly known as CAE Industries Ltd. and changed its name to CAE Inc. in June 1993. CAE Inc. was founded in 1947 and is headquartered in Saint-Laurent, Canada.

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