Critical Analysis: CAE (NYSE:CAE) vs. Rocket Lab (NASDAQ:RKLB)

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

Risk and Volatility

CAE has a beta of 1.36, suggesting that its stock price is 36% more volatile than the S&P 500. Comparatively, Rocket Lab has a beta of 2.14, suggesting that its stock price is 114% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
CAE	8.70%	7.92%	3.51%
Rocket Lab	-45.87%	-48.14%	-17.98%

Earnings & Valuation

This table compares CAE and Rocket Lab”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CAE	$4.73 billion	1.94	$291.29 million	$0.92	31.07
Rocket Lab	$504.26 million	61.01	-$190.18 million	($0.45)	-141.27

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

Insider and Institutional Ownership

67.4% of CAE shares are owned by institutional investors. Comparatively, 71.8% of Rocket Lab shares are owned by institutional investors. 18.3% of CAE shares are owned by company insiders. Comparatively, 11.9% of Rocket Lab shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and target prices for CAE and Rocket Lab, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CAE	0	5	5	2	2.75
Rocket Lab	1	4	8	2	2.73

CAE presently has a consensus target price of $33.67, suggesting a potential upside of 17.78%. Rocket Lab has a consensus target price of $51.75, suggesting a potential downside of 18.59%. Given CAE’s stronger consensus rating and higher possible upside, equities analysts clearly believe CAE is more favorable than Rocket Lab.

Summary

CAE beats Rocket Lab on 10 of the 14 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 Rocket Lab

Rocket Lab USA, Inc., a space company, provides launch services and space systems solutions for the space and defense industries. The company provides launch services, spacecraft design services, spacecraft components, spacecraft manufacturing, and other spacecraft and on-orbit management solutions; and constellation management services, as well as designs and manufactures small and medium-class rockets. It also designs, manufactures, and sells Electron, a reusable orbital-class small rocket; and the Photon satellite platforms, as well as developing the Neutron 8-ton payload class launch vehicle; conducts remote launch activities; and designs and manufactures a range of components and subsystems for the Photon family of spacecraft and broader merchant spacecraft components. The company serves commercial, aerospace prime contractors, and government customers. Rocket Lab USA, Inc. was founded in 2006 and is headquartered in Long Beach, California.