Head-To-Head Contrast: CAE (NYSE:CAE) versus Mercury Systems (NASDAQ:MRCY)

CAE (NYSE:CAE) and Mercury Systems (NASDAQ:MRCY) are both aerospace companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, earnings, valuation, profitability and dividends.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for CAE and Mercury Systems, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CAE	0	4	5	2	2.82
Mercury Systems	2	3	4	1	2.40

CAE currently has a consensus target price of $34.33, indicating a potential upside of 5.49%. Mercury Systems has a consensus target price of $86.89, indicating a potential upside of 3.00%. Given CAE’s stronger consensus rating and higher possible upside, equities research analysts clearly believe CAE is more favorable than Mercury Systems.

Valuation and Earnings

This table compares CAE and Mercury Systems”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CAE	$3.28 billion	3.19	$291.29 million	$0.97	33.55
Mercury Systems	$912.02 million	5.55	-$37.90 million	($0.53)	-159.17

CAE has higher revenue and earnings than Mercury Systems. Mercury Systems 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

67.4% of CAE shares are owned by institutional investors. Comparatively, 96.0% of Mercury Systems shares are owned by institutional investors. 18.3% of CAE shares are owned by insiders. Comparatively, 1.4% of Mercury Systems shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares CAE and Mercury Systems’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CAE	8.98%	7.60%	3.41%
Mercury Systems	-3.23%	1.28%	0.76%

Risk and Volatility

CAE has a beta of 1.11, meaning that its share price is 11% more volatile than the S&P 500. Comparatively, Mercury Systems has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500.

Summary

CAE beats Mercury Systems on 13 of the 15 factors compared between the two stocks.

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.

About Mercury Systems

Mercury Systems, Inc., a technology company, manufactures and sells components, products, modules, and subsystems for aerospace and defense industries in the United States, Europe, and the Asia Pacific. Its products and solutions are deployed in approximately 300 programs with 25 defense contractors and commercial aviation customers. The company offers components, including power amplifiers and limiters, switches, oscillators, filters, equalizers, digital and analog converters, chips, monolithic microwave integrated circuits, and memory and storage devices; modules and sub-assemblies, such as embedded processing boards, switched fabrics and boards, digital receivers, multi-chip modules, integrated radio frequency and microwave multi-function assemblies, tuners, and transceivers, as well as graphics and video boards; and integrated subsystems. It also designs and develops digital radio frequency memory units for various modern electronic warfare applications; radar environment simulation and test systems for defense and intelligence applications; and signals intelligence payloads and EO/IR technologies for small UAV platforms, as well as onboard UAV processor systems for real-time wide area motion imagery. The company was formerly known as Mercury Computer Systems, Inc. and changed its name to Mercury Systems, Inc. in November 2012. The company was incorporated in 1981 and is headquartered in Andover, Massachusetts.