Financial Analysis: CAE (CAE) versus GP Strategies Corporation (GPX)

GP Strategies Corporation (NYSE: GPX) and CAE (NYSE:CAE) are both consumer discretionary companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, valuation, earnings, dividends, institutional ownership, risk and profitability.

Risk and Volatility

GP Strategies Corporation has a beta of 0.92, suggesting that its stock price is 8% less volatile than the S&P 500. Comparatively, CAE has a beta of 0.89, suggesting that its stock price is 11% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings for GP Strategies Corporation and CAE, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
GP Strategies Corporation 0 1 1 0 2.50
CAE 0 2 2 0 2.50

GP Strategies Corporation presently has a consensus target price of $29.50, indicating a potential upside of 18.00%. CAE has a consensus target price of $22.00, indicating a potential upside of 26.07%. Given CAE’s higher possible upside, analysts clearly believe CAE is more favorable than GP Strategies Corporation.

Earnings and Valuation

This table compares GP Strategies Corporation and CAE’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
GP Strategies Corporation $490.56 million 0.86 $20.24 million $1.18 21.19
CAE $2.06 billion 2.28 $191.59 million $0.75 23.27

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

Profitability

This table compares GP Strategies Corporation and CAE’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
GP Strategies Corporation 3.95% 12.16% 6.50%
CAE 9.55% 13.35% 5.26%

Dividends

CAE pays an annual dividend of $0.29 per share and has a dividend yield of 1.7%. GP Strategies Corporation does not pay a dividend. CAE pays out 38.7% of its earnings in the form of a dividend.

Institutional & Insider Ownership

89.2% of GP Strategies Corporation shares are owned by institutional investors. Comparatively, 53.0% of CAE shares are owned by institutional investors. 25.7% of GP Strategies Corporation shares are owned by insiders. Comparatively, 18.3% of CAE shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

CAE beats GP Strategies Corporation on 9 of the 15 factors compared between the two stocks.

About GP Strategies Corporation

GP Strategies Corporation (GP Strategies) is a global performance improvement solutions provider of sales and technical training, e-learning solutions, management consulting and engineering services. The Company operates in five segments: Learning Solutions, Professional & Technical Services, Sandy Training & Marketing, RWD and Energy Services. Its clients include companies and governmental and other commercial customers in a variety of industries. It serves companies in the automotive, steel, oil and gas, power, chemical, electronics and technology, manufacturing, software, financial, retail, healthcare and food and beverage industries, as well as government agencies. On December 31, 2011, GP Strategies Corporation merged with and into its operating subsidiary, General Physics Corporation (General Physics). In April 2014, the Company acquired Effective-People and Effective-Learning companies.

About CAE

CAE Inc. provides training for the civil aviation, defense and security, and healthcare markets. The Company designs and integrates training solutions. It operates through three segments: Civil Aviation Training Solutions, Defense and Security, and Healthcare. The Company provides training solutions for flight, cabin, maintenance and ground personnel in commercial, business and helicopter aviation, a range of flight simulation training devices, as well as ab initio pilot training and crew sourcing services. The Company is a training systems integrator for defense forces across the air, land and sea domains, and for government and civil security organizations responsible for public safety. The Company designs, manufactures and markets simulators, simulation center management solutions and courseware for training of medical and allied healthcare students and clinicians in educational institutions, hospitals and defense organizations across the world.

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