Head-To-Head Comparison: AAR (NYSE:AIR) and CAE (NYSE:CAE)

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

Insider and Institutional Ownership

67.4% of CAE shares are owned by institutional investors. Comparatively, 90.7% of AAR shares are owned by institutional investors. 18.3% of CAE shares are owned by insiders. Comparatively, 3.6% of AAR shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current recommendations and price targets for CAE and AAR, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CAE	0	4	6	2	2.83
AAR	0	3	4	0	2.57

CAE currently has a consensus target price of $34.33, suggesting a potential upside of 25.69%. AAR has a consensus target price of $119.60, suggesting a potential upside of 15.33%. Given CAE’s stronger consensus rating and higher probable upside, research analysts clearly believe CAE is more favorable than AAR.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
CAE	7.70%	7.75%	3.57%
AAR	3.17%	12.40%	5.43%

Volatility and Risk

CAE has a beta of 1.11, suggesting that its share price is 11% more volatile than the S&P 500. Comparatively, AAR has a beta of 1.19, suggesting that its share price is 19% more volatile than the S&P 500.

Earnings and Valuation

This table compares CAE and AAR”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CAE	$3.28 billion	2.68	$291.29 million	$0.83	32.91
AAR	$2.78 billion	1.48	$12.50 million	$2.55	40.67

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

Summary

CAE beats AAR on 9 of the 15 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 AAR

AAR Corp. provides products and services to commercial aviation, government, and defense markets worldwide. The Parts Supply segment leases and sells aircraft components and replacement parts. The Repair & Engineering segment provides airframe maintenance services, such as airframe inspection, painting, line maintenance, airframe modification, structural repair, avionics service and installation, exterior and interior refurbishment, and engineering and support services; component repair services comprising maintenance, repair, and overhaul (MRO) services, engine and airframe accessories, and interior refurbishment; and landing gear overhaul services, including repair services on wheels and brakes. This segment also develops specific aircraft components and parts; and designs proprietary designated engineering representative repairs. The Integrated Solutions segment engages in the fleet management and operation of customer-owned aircraft; provision of supply chain logistics services, such as material planning, sourcing, logistics, information and program management, and parts and component repair and overhaul services; and flight hour component inventory and repair services. In addition, the segment provides integrated software solutions comprising Trax, a cloud-based electronic enterprise resource platform, as well as a suite of paperless mobility apps for automating MRO workflows. The Expeditionary Services segment designs, manufactures, and repairs transportation pallets; and containers and shelters for military and humanitarian tactical deployment activities, including armories, supply and parts storage, refrigeration systems, tactical operation centers, briefing rooms, laundry and kitchen facilities, water treatment, and sleeping quarters, as well as engages in provision of engineering, design, and system integration services for specialized command and control systems. AAR Corp. was founded in 1951 and is headquartered in Wood Dale, Illinois.