CAE Beats EPS by 25% as Defense Surge Offsets Revenue Miss

CAE reported adjusted EPS of $0.33 for its fiscal second quarter of 2027, beating the consensus estimate of $0.26 by roughly 25%. Revenue of $1.20 billion came in 3.5% short of expectations and slipped 2.6% from a year earlier.

The profit beat came almost entirely from the Defense and Security segment, where adjusted operating income surged 43% year over year and margin expanded to 13.6% from 9.3%. Civil Aviation moved the other way, with profitability pressured by lower simulator sales and higher selling, general and administrative costs.

Free cash flow came in at $179.9 million, up from $109.8 million a year ago, driven primarily by lower capital expenditures. Lower finance expense and a reduced effective tax rate also helped lift the bottom line.

Management raised full-year fiscal 2027 adjusted EPS guidance to a range of $1.28 to $1.35 and lifted adjusted segment operating income margin guidance. The revenue outlook was left unchanged at low-single-digit percentage growth.

CAE also announced an agreement to sell Flightscape to SITA for $500 million, with the deal expected to close in the first half of calendar 2027. CEO Matthew Bromberg said proceeds would go toward transformation funding, core business growth, and returning capital to shareholders. The company repurchased shares in the quarter under its normal course issuer bid.