DCF Studio

    CAE.TO · TOR · Industrials

    CAE Inc.

    Also onConsensus Drift

    Implied value per share

    CAD 20.12

    Market price

    CAD 32.75

    Implied upside

    -38.6%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    NoteRisk-free rate is an assumption: CAD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    CAD 20.12-38.6%
    Exit multiple
    CAD 39.65+21.1%
    Market price
    CAD 32.75

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CAD). Outflows negative.

    0m410m821mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayCAD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueCAD 5.3bnCAD 5.6bnCAD 6.0bnCAD 6.4bnCAD 6.9bn+7.0%
    EBITCAD 628.8mCAD 672.9mCAD 720.0mCAD 770.5mCAD 824.5m+7.0%
    NOPATCAD 507.1mCAD 542.6mCAD 580.6mCAD 621.3mCAD 664.8m+7.0%
    Add depreciation & amortisationCAD 466.1mCAD 498.7mCAD 533.7mCAD 571.1mCAD 611.1m+7.0%
    Less capital expenditureCAD -506.7mCAD -542.2mCAD -580.2mCAD -620.9mCAD -664.4m+7.0%
    Less increase in working capitalCAD 159.6mCAD 170.8mCAD 182.8mCAD 195.6mCAD 209.3m-7.0%
    Free cashflow to firmCAD 626.0mCAD 669.9mCAD 716.8mCAD 767.1mCAD 820.8m+7.0%
    Discount factor0.96300.89300.82810.76800.7122-
    Present valueCAD 602.9mCAD 598.2mCAD 593.6mCAD 589.1mCAD 584.5m-0.8%
    Present Value Of The ForecastCAD 3.0bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate3.30%CAD assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta1.011Reported 1.017, pulled toward 1.0 (Blume)
    Cost of equity8.86%Risk-free + beta x equity risk premium
    Cost of debt5.56%Interest expense / average total debt
    Market capitalisationCAD 10.5bn76.5% of capital
    Total debtCAD 3.2bn23.5% of capital, book value as a proxy
    Tax rate19.4%Effective, capped at statutory
    WACC7.84%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareCAD 20.12

    68% of EV

    Forecast FCFF, final year
    CAD 820.8m
    Capex at depreciation, working capital in reinvestment
    CAD 664.8m
    Less reinvestment at g/ROIC (31.9% of NOPAT)
    CAD -212.1m
    Capitalised
    CAD 452.7m
    ROIC (WACC floor)
    7.8%
    Terminal value, undiscounted
    CAD 8.7bn
    Terminal value, discounted
    CAD 6.2bn
    Enterprise value
    CAD 9.2bn
    Less net debt
    CAD 2.7bn
    Equity value
    CAD 6.5bn

    Exit at 12.2x EBITDA

    Value per shareCAD 39.65

    81% of EV

    Terminal value, undiscounted
    CAD 17.5bn
    Terminal value, discounted
    CAD 12.5bn
    Enterprise value
    CAD 15.5bn
    Less net debt
    CAD 2.7bn
    Equity value
    CAD 12.8bn

    Spread between methods: 65%.

    Sensitivity

    Value per share (CAD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.83%29.4629.7630.1130.5431.09
    6.83%23.8623.9824.0924.2024.31
    7.83%19.9320.0220.1220.2120.30
    8.83%16.8816.9617.0417.1217.20
    9.84%14.4414.5114.5814.6514.72

    Outlined: this model. Green text: above today's price of 32.75. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year7.0%14.5%+7.5pp
    EBIT margin12.0%17.6%+5.7pp
    Discount rate7.8%5.6%-2.2pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.