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CAE Inc. (CAE) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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CAE Inc. (CAE)

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Intrinsic Value (DCF)

Current$33.15
→
Intrinsic$31.49
-5%
$18.29$31.49$56.54
Market implies 21% growth for 5 years
CAE appears fairly valued — current price aligns with our DCF estimate.
At $33, the market prices in continued strong cash flow growth (21%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $18 → Bull $57. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →16%18%20%22%
8%$41$45$49$54
10%$26$28$31$35
12%$17$19$22$24
14%$12$14$15$17

Bull Case

  • Bull case ($57) offers 71% upside at 24% growth, 9% discount

Bear Case

  • Bear case ($18) implies 45% downside at 16% growth, 12% discount
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5-Year Free Cash Flow Projection

Year 1$542.88M
Year 2$651.46M
Year 3$781.75M
Year 4$938.10M
Year 5$1.13B
Terminal$16.56B

📐 Model Inputs

Growth Rate20.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$452.40MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is CAE stock undervalued or overvalued?
🟡 FAIRLY VALUED

CAE trades at $33.15, within 10% of our $31.49 intrinsic value estimate. At 10.0% WACC and 20.0% FCF growth, the market is pricing in assumptions roughly aligned with the 5-year historical CAGR. The valuation range spans $17.23 (bear) to $52.48 (bull).

What is CAE's intrinsic value?

Using a 5-year DCF model: Base FCF of $452M, projected at 20.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $3.18B net debt and dividing by 0.32B shares: Bear $17.23 | Base $31.49 | Bull $52.48. Current price $33.15 implies -2% to base case.

How is CAE's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 20.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($13.24B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.