CAE Inc (TSX:CAE), a aerospace & defense company based in Canada, had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of CA$21.73 to CA$23.53. However, is this the true valuation level of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at CAE’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for CAE

What’s the opportunity in CAE?

According to my valuation model, CAE seems to be fairly priced at around 11% above my intrinsic value, which means if you buy CAE today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is CA$21.17, there’s only an insignificant downside when the price falls to its real value. Furthermore, CAE’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

What kind of growth will CAE generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 26.82% over the next couple of years, the future seems bright for CAE. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? It seems like the market has already priced in CAE’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on CAE, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on CAE. You can find everything you need to know about CAE in the latest infographic research report. If you are no longer interested in CAE, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.