CAE (NYSE:CAE) & Textron (NYSE:TXT) Head to Head Analysis

Textron (NYSE:TXT) and CAE (NYSE:CAE) are both industrials companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, earnings, dividends, profitability, risk and institutional ownership.

Volatility & Risk

Textron has a beta of 0.9, meaning that its share price is 10% less volatile than the S&P 500. Comparatively, CAE has a beta of 1.01, meaning that its share price is 1% more volatile than the S&P 500.

Earnings and Valuation

This table compares Textron and CAE”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Textron	$14.80 billion	0.93	$921.00 million	$5.30	15.05
CAE	$4.99 billion	1.51	$226.62 million	$0.65	36.26

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

Institutional & Insider Ownership

86.0% of Textron shares are held by institutional investors. Comparatively, 67.4% of CAE shares are held by institutional investors. 1.9% of Textron shares are held by company insiders. Comparatively, 18.3% of CAE shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Textron and CAE, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Textron	0	7	2	1	2.40
CAE	1	4	5	0	2.40

Textron presently has a consensus target price of $102.44, suggesting a potential upside of 28.40%. CAE has a consensus target price of $31.00, suggesting a potential upside of 31.52%. Given CAE’s higher possible upside, analysts clearly believe CAE is more favorable than Textron.

Dividends

Textron pays an annual dividend of $0.08 per share and has a dividend yield of 0.1%. CAE pays an annual dividend of $0.33 per share and has a dividend yield of 1.4%. Textron pays out 1.5% of its earnings in the form of a dividend. CAE pays out 50.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Textron	6.12%	14.30%	6.26%
CAE	6.36%	7.45%	3.51%

About Textron

Textron Inc. operates in the aircraft, defense, industrial, and finance businesses worldwide. It operates through six segments: Textron Aviation, Bell, Textron Systems, Industrial, Textron eAviation, and Finance. The Textron Aviation segment manufactures, sells, and services business jets, turboprop and piston engine aircraft, and military trainer and defense aircraft; and offers maintenance, inspection, and repair services, as well as sells commercial parts. The Bell segment supplies military and commercial helicopters, tiltrotor aircrafts, and related spare parts and services. The Textron Systems segment offers unmanned aircraft systems, electronic systems and solutions, advanced marine crafts, piston aircraft engines, live military air-to-air and air-to-ship training, weapons and related components, and armored and specialty vehicles. The Industrial segment offers blow-molded solutions, including conventional plastic fuel tanks and pressurized fuel tanks for hybrid vehicle applications, clear-vision systems, plastic tanks for catalytic reduction systems, and battery housing systems for use in electric vehicles primarily to automobile original equipment manufacturers (OEMs); and golf cars, off-road utility vehicles, powersports products, light transportation vehicles, aviation ground support equipment, professional turf-maintenance equipment, and turf-care vehicles to golf courses and resorts, government agencies and municipalities, consumers, outdoor enthusiasts, and commercial and industrial users. The Textron eAviation segment manufactures and sells light aircraft and gliders with electric and combustion engines; and provides other research and development initiatives related to sustainable aviation solutions. The Finance segment offers financing services to purchase new and pre-owned aviation aircraft and Bell helicopters. Textron Inc. was founded in 1923 and is headquartered in Providence, Rhode Island.

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.