Head-To-Head Review: Innovative Solutions and Support (NASDAQ:ISSC) and CAE (NYSE:CAE)

CAE (NYSE:CAE) and Innovative Solutions and Support (NASDAQ:ISSC) are both aerospace companies, but which is the better investment? We will compare the two businesses based on the strength of their analyst recommendations, earnings, risk, dividends, profitability, institutional ownership and valuation.

Volatility and Risk

CAE has a beta of 1.19, suggesting that its stock price is 19% more volatile than the S&P 500. Comparatively, Innovative Solutions and Support has a beta of 0.77, suggesting that its stock price is 23% less volatile than the S&P 500.

Institutional & Insider Ownership

67.4% of CAE shares are held by institutional investors. Comparatively, 28.5% of Innovative Solutions and Support shares are held by institutional investors. 18.3% of CAE shares are held by insiders. Comparatively, 4.4% of Innovative Solutions and Support shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares CAE and Innovative Solutions and Support’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CAE	8.98%	7.60%	3.41%
Innovative Solutions and Support	15.10%	23.86%	14.15%

Analyst Ratings

This is a summary of recent ratings and target prices for CAE and Innovative Solutions and Support, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CAE	1	5	5	2	2.62
Innovative Solutions and Support	0	1	1	2	3.25

CAE currently has a consensus target price of $34.33, indicating a potential upside of 28.42%. Innovative Solutions and Support has a consensus target price of $16.50, indicating a potential upside of 71.70%. Given Innovative Solutions and Support’s stronger consensus rating and higher possible upside, analysts clearly believe Innovative Solutions and Support is more favorable than CAE.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CAE	$3.28 billion	2.62	$291.29 million	$0.97	27.56
Innovative Solutions and Support	$77.43 million	2.19	$7.00 million	$0.66	14.56

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

Summary

CAE beats Innovative Solutions and Support on 9 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 Innovative Solutions and Support

Innovative Solutions and Support, Inc., a systems integrator, designs, develops, manufactures, sells, and services flight guidance, autothrottles, and cockpit display systems in the United States and internationally. It offers flat panel display systems that replicate the display of analog or digital displays on one screen and replace existing displays in legacy aircraft, as well as used for security monitoring on-board aircraft and as tactical workstations on military aircraft; and flight deck management system, a navigation and performance computer that upgrade for commercial air transport aircraft. The company also provides integrated standby units, which incorporate the measurement and display of attitude, altitude, airspeed, and navigation data into a single backup navigation instrument for military, commercial air transport, and corporate/general aviation applications. In addition, it offers digital air data computers that calculate various air data parameters, such as altitude, airspeed, vertical speed, angle of attack, and other information; integrated air data computers and display units, which calculate and convey air data information; altitude displays that convey aircraft altitude measurements; airspeed displays that convey various airspeed measurements; and altitude alerters. Further, the company offers the engine and fuel displays that convey information related to fuel and oil levels, and engine activity, including oil and hydraulic pressure and temperature; integrated global navigation systems; ThrustSense, a full regime autothrottle; and utility management systems. It serves commercial air transport carriers and corporate/general aviation companies, the Department of Defense and its commercial contractors, aircraft operators, aircraft modification centers, government agencies, and foreign militaries, as well as original equipment manufacturers. Innovative Solutions and Support, Inc. was incorporated in 1988 and is based in Exton, Pennsylvania.