Why CAE is Too Pricey to Pick Up Ahead of Earnings

CAE (TSX:CAE)(NYSE:CAE) is a Montreal-based manufacturer of simulation technologies. It services several sectors, including aircraft manufacturers, defence customers, and healthcare specialists. Shares of CAE have climbed 47% year-over-year as of close on January 17.

The stock is trading near a 52-week high, but I still love CAE right now.

Investors can expect to see its third-quarter fiscal 2020 results by the middle of February. It churned out another impressive performance in the first half of this fiscal year.

Revenue rose 21% year-over-year to $896.8 million in Q2 FY2020, and operating income increased 28% to $124.8 million. CAE secured almost $1 billion in orders in the quarter, which contributed to its massive $9.2 billion order backlog.

The Civil Aviation Training segment led the way as revenue rose 35% to $529.9 million. Defence was no slouch either, as revenue increased 5% from the prior year to $336.5 million. Its defence segment has a profile that is more heavily weighted in the back half of the fiscal year.

This company is well-positioned to service several growing industries and boasts a huge backlog that should drive growth for many quarters to come.

The stock last paid out a quarterly dividend of $0.11 per share, representing a modest 1.1% yield. CAE stock possesses a high price-to-earnings ratio of 30 and a price-to-book value of 4.5.

CAE is a pricey addition right now. I love the stock going forward, but investors should exercise patience and look to stack at more favourable price levels.