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Summary
- A man dressed in medieval clothing armed with a knife, left multiple victims injured and two dead near the parliament area in Quebec City.
- Mission Ready Solutions Inc has 11 government contracts valued at US$11 billion. The stock gained 119 per cent YTD.
- CAE Inc is the first Canadian aerospace company to become carbon neutral as of September 28, 2020. The company’s current market capitalization is C$6.05 billion.
Two persons died and five were injured in a knife attack by a man dressed in medieval clothing near the parliament area in Quebec City on Halloween night. This comes close on the heels of the French teacher attack. Quebec is predominantly a French-speaking province of Canada. Authorities have arrested the suspect and launched an investigation in this matter. Security has been beefed up in and around the area, and people were asked to stay indoors. In light of this incident, let us explore two Canadian defense stocks: Mission Ready Solutions Inc. (TSXV:MRS) and CAE Inc. (TSX:CAE).
Mission Ready Solutions Inc. (TSXV:MRS)
Current Stock Price: C$0.175
Mission Ready Solutions Inc is primarily engaged into providing defense products and security systems for protection service agencies in Canada. The company through its subsidiary Unifire, Inc. has been awarded seven government contracts for personal protective equipment comprising of disposable isolation gowns.
Unifire founded in 1987, is a specialist solutions provider to the US Defense Logistics Agency (DLA), and is among the six authorized companies worldwide to provide equipment and services under the Tailored Logistic Support (TSL), Special Operations Equipment (SOE) program. This means when a request is raised for a specific product, the DLA will contact the six prime vendors first, who will get price from the manufacturers in their respective networks and respond back to the DLA with best price and lead time.
The company has 11 government contracts valued at US$11 billion, more than 500 vendor relationships and close to 1.5 million products. The stock gained 119 per cent YTD. Current market capitalization of the company is C$33 million. The stock holds profit-to-book (P/B) ratio of 5.833.
As per the second quarter results (for the period ended June 30, 2020) the company’s gross revenues for the three months were C$27.21 million, an increase of C$24.94 million or 1098 per cent from the C$2.27 million in the same period last year. This increase in revenues can be attributed to the direct acquisition of Unifire Inc as of April 23, 2019. The cost of goods sold was C$25.16 million in Q2 2020, as compared to C$1.73 million in Q2 2019.
The net loss for the period saw a 63 per cent decrease from C$0.96 million in Q2 2019 to C$0.35 in Q2 2020. This decrease in net loss is due to increased revenue and higher gross profit post acquisition of Unifire Inc. As of June 30, 2020, the company reported a working capital deficit of C$12.80 million.
CAE Inc. (TSX:CAE)
Current Stock Price: C$22.77
The company is focused on delivering training for the defense, civil aviation, security, and healthcare sectors. Besides providing training programs, the company also supplies aviation personnel on a lease basis. Close to one-third of the company sales is from United States and the remaining from several other nations. The company will be releasing its second quarter results for fiscal 2021 on November 10.
CAE Inc is the first Canadian aerospace company to become carbon neutral as of September 28, 2020. The company also launched Airside, a digital platform for pilots to support their career and training tools during the pandemic times in June 2020.
Six-month price chart of CAE Inc (Source: EODHD/Others, Thomson Reuters)
The stock has declined 33.76 per cent YTD. The company’s current market capitalization is C$6.05 billion. Earnings per share (EPS) is C$0.52. The stock holds profit-to-equity (p/E) ratio of 43.80, profit-to-book (P/B) ratio of 2.685, and profit-to-cash flow (P/CF) ratio of 11.80. Positive return on equity (RoE) and return on assets (RoA) is offered by the company at 6.06 per cent and 1.83 per cent, respectively.
For the first quarter of fiscal 2021, the company reported total revenue of C$550.5 million in Q1 2021, down by 33 per cent from C$825.6 million in Q1 2020. The segment operating loss was C$110.3 million, as compared with a segment operating income of C$110.9 million (13.4 per cent of revenue) in the first quarter of last year. The net loss attributable to equity holders was C$110.6 million in Q1 2021, as compared to a net income of C$61.5 million in Q1 2020.
The non-cash working capital was positive C$36.9 million for Q1 2021, as compared to C$137.8 million in the first quarter last year. Free cash flow was negative C$92.7 million for Q1 2021, as compared to negative C$102.1 million in the same period last year. The company announced C$100 million restructuring program to yield C$50 million annual savings.
