CAE (NYSE:CAE) vs. BAE Systems (OTCMKTS:BAESF) Head-To-Head Analysis

CAE (NYSE:CAE) and BAE Systems (OTCMKTS:BAESF) are both industrials companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, institutional ownership, analyst recommendations, profitability, earnings, dividends and risk.

Analyst Recommendations

This is a summary of current ratings and price targets for CAE and BAE Systems, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CAE	1	4	5	0	2.40
BAE Systems	0	0	0	0	0.00

CAE currently has a consensus price target of $31.00, indicating a potential upside of 14.10%. Given CAE’s stronger consensus rating and higher probable upside, research analysts plainly believe CAE is more favorable than BAE Systems.

Valuation and Earnings

This table compares CAE and BAE Systems”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CAE	$4.91 billion	1.78	$226.62 million	$0.71	38.27
BAE Systems	N/A	N/A	N/A	$0.06	517.10

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

Profitability

This table compares CAE and BAE Systems’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CAE	6.36%	7.45%	3.51%
BAE Systems	N/A	N/A	N/A

Dividends

CAE pays an annual dividend of $0.33 per share and has a dividend yield of 1.2%. BAE Systems pays an annual dividend of $0.20 per share and has a dividend yield of 0.7%. CAE pays out 46.3% of its earnings in the form of a dividend. BAE Systems pays out 347.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CAE is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

67.4% of CAE shares are held by institutional investors. Comparatively, 40.7% of BAE Systems shares are held by institutional investors. 18.3% of CAE shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

CAE beats BAE Systems on 12 of the 13 factors compared between the two stocks.

About CAE

CAE Inc., together with its subsidiaries, provides simulation training and critical operations support solutions in Canada, the United States, the United Kingdom, Europe, Asia, the Oceania, Africa, and Rest of the Americas. It operates through two segments, Civil Aviation; and Defense and Security. The Civil Aviation segment offers training solutions for flight, cabin, maintenance, and ground personnel in commercial, business, and helicopter aviation; a range of flight simulation training devices; and ab initio pilot training and crew sourcing services, as well as aircraft flight operations solutions. The Defense and Security segment operates as a training and simulation provider that delivers platform-independent solutions to enable and enhance force readiness and security for defense forces, original equipment manufacturers (OEMs), government agencies, and public safety organizations. The company was formerly known as CAE Industries Ltd. and changed its name to CAE Inc. in 1993. CAE Inc. was incorporated in 1947 and is headquartered in Saint-Laurent, Canada.

About BAE Systems

BAE Systems plc provides defense, aerospace, and security solutions worldwide. The company operates through five segments: Electronic Systems, Platforms & Services, Air, Maritime, and Cyber & Intelligence. The Electronic Systems segment offers electronic warfare systems, navigation systems, electro-optical sensors, military and commercial digital engine and flight controls, precision guidance and seeker solutions, military communication systems and data links, persistent surveillance capabilities, space electronics, and electric drive propulsion systems. The Cyber & Intelligence segment provides solutions to modernize, maintain, and test cyber-harden aircraft, radars, missile systems, and mission applications that detect and deter threats to national security; systems engineering, integration, and sustainment services for critical weapons systems, C5ISR, and cyber security; and solutions and services to intelligence and federal/civilian agencies. It also offers data intelligence solutions to protect nations, businesses, and citizens. The Platforms & Services segment manufactures, and upgrades combat vehicles, weapons, and munitions, as well as provides naval ship repair services and the management of government-owned ammunition plants. The Air segment develops future combat air systems and falconworks. The Maritime segment provides maritime and land activities, including submarine, ship build, and support programmes. BAE Systems plc was founded in 1970 and is headquartered in Camberley, the United Kingdom.