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CAE Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

Simply Wall St

As you might know, CAE Inc. (TSE:CAE) just kicked off its latest quarterly results with some very strong numbers. It was overall a positive result, with revenues beating expectations by 5.4% to hit CA$897m. CAE reported earnings per share (EPS) CA$0.28, which was a notable 11% above what analysts had forecast. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see analysts' latest post-earnings forecasts for next year.

See our latest analysis for CAE

TSX:CAE Past and Future Earnings, November 16th 2019

Taking into account the latest results, the current consensus from CAE's eight analysts is for revenues of CA$3.81b in 2020, which would reflect a reasonable 7.0% increase on its sales over the past 12 months. Earnings per share are expected to increase 8.1% to CA$1.36. Before this earnings report, analysts had been forecasting revenues of CA$3.74b and earnings per share (EPS) of CA$1.35 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at CA$37.13. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. There are some variant perceptions on CAE, with the most bullish analyst valuing it at CA$40.00 and the most bearish at CA$34.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.

Further, we can compare these estimates to past performance, and see how CAE forecasts compare to the wider market's forecast performance. We would highlight that CAE's revenue growth is expected to slow, with forecast 7.0% increase next year well below the historical 9.0%p.a. growth over the last five years. Juxtapose this against the other companies in the market with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.3% next year. Even after the forecast slowdown in growth, it seems obvious that analysts still thinkCAE will grow faster than the wider market.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that CAE's revenues are expected to grow faster than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for CAE going out to 2022, and you can see them free on our platform here..

You can also view our analysis of CAE's balance sheet, and whether we think CAE is carrying too much debt, for free on our platform here.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.