AUS
NZ
UK
CA
USA
IND
Summary
- With rising number of COVID cases, formal Remembrance Day events will be held privately this year.
- Ahead of Canada’s Remembrance Day, which falls on November 11, defense stocks of CAE Inc (TSX:CAE) and Heroux-Devtek Inc (TSX:HRX) are trending.
- CAE scrips jumped about five per cent on Tuesday, after the company released its quarterly results.
Canada marks its Remembrance Day on November 11, commemorating the armistice agreement that ended World War I in 1918. Every year, Canadians observe this day to honor its army veterans. Ahead of the Remembrance Day this year, stocks of CAE Inc (TSX:CAE) and Heroux-Devtek Inc (TSX:HRX), both from the aerospace and defense industry, are trending high on the Toronto Stock Exchange (TSX).
While it a federal statutory holiday in Canada, stock markets remain open on Remembrance Day, which falls on a Wednesday this year.
Ahead of it, stock markets zoomed up on Monday, November 9, following the news of the COVID-19 vaccine candidate by pharmaceutical companies Pfizer and BioNTech showing 90 per cent effectiveness in its latest trial. The S&P/TSX Composite Index spiked around ~0.85 per cent on Monday, with its quarter-to-date (QTD) growth standing at over 3 per cent. The benchmark Canadian index is down 2.63 per cent this year, at the time of filing this story.
Formerly known as Armistice Day, Remembrance Day was renamed after a bill was passed by the House of Commons in 1931. With COVID cases still haunting the country, formal Remembrance Day events will be held privately this year in Chatham-Kent by the Royal Canadian Legion Zone A-3 branches. Only those with invitations would be allowed to attend the ceremony, and others can watch it on television.
Let’s take a closer look at the defense stocks of CAE Inc and Heroux-Devtek Inc to understand their performances better.
CAE Inc (TSX:CAE)
Current Stock Price: C$ 29.27
CAE stocks are trended in the Canadian equity markets for large price gains in the last 30 days across the TSX and the TSXV. It currently has a 52-week high of C$ 42, and a market cap of C$ 7.8 billion.
CAE stocks took a sharp dip amid the COVID-triggered market collapse around March. Though the stock price has rebounded since its March lows, it is far from the pre-COVID levels of January and February 2020.
CAE Inc’s YTD chart of stock performance (Source: EODHD/Others/Thompson Reuters)
In the last six months, the scrips climbed about 33 per cent and about 40 per cent in the last three months. But despite the rebound, CAE shares are down almost 15 per cent his year.
The scrips jumped about five per cent on Tuesday ahead of the Remembrance Day.
CAE INC Q2 FY2021 FINANCIAL RESULTS
CAE Inc released its second quarter of fiscal 2021 results on Tuesday, November 10, reporting a 28 per cent quarter-over-quarter (QoQ) jump in revenue. At C$ 704.7 million, however, CAE Inc’s Q2 FY2021 revenue was down 21 per cent year-over-year (YoY).
Its operating profit of C$ 28.2 million in Q2 FY2021 was a significant improvement from an operating loss of C$ 110.3 million in Q1 FY2021. The company also generated a net cash of C$ 45.6 million from operating activities in the latest quarter, up from that of C$ 36.7 million in Q1 FY2021.
CAE Inc recorded a positive free cash flow of C$ 44.9 million in the second quarter of fiscal 2021, as against a negative one of C$ 92.7 million in Q1 FY2021.
Heroux-Devtek Inc (TSX:HRX)
Current Stock Price: C$ 29.27
Stocks of Canadian aerospace company Heroux-Devtek Inc are rallying among industrial stocks that have made the largest price gains by dollar value in the last one month across the TSX and the TSXV. However, Heroux-Devtek stocks are down about 34 per cent year-to-date (YTD).
Since plummeting amid the market crash back in March, the scrips have steadily rebounded about 23 per cent in the last six months. In November so far, Heroux-Devtek shares rose over 25 per cent.
HEROUX-DEVTEK Q2 FY2021 FINANCIAL RESULTS
Heroux-Devtek Inc recorded sales worth C$ 128.3 million in its first quarter of fiscal 2021, down 10.5 per cent YoY from that of C$ 143.4 million in Q1 FY2020. Its operating income of C$ 1.4 million in Q1 FY2021 also saw a significant drop from C$ 10.4 million in Q1 FY2020.
The company’s adjusted EBITDA stood at C$ 18.4 million in the first quarter fiscal of FY2021 ending 30 June 2020, down from C$ 21.5 million in Q1 FY2020. Its cash flow related to operating activities was C$ 15.5 million in the latest quarter.
Heroux-Devtek Inc, which claims to be the third largest landing gear manufacturer in the world, had available liquidity of C$ 204.6 million and the end of its first fiscal quarter 2021.
Its net debt stood at C$ 233.2 million by the end of June 2020, down from C$ 246.9 million as of 31 March 2020.
Remembrance Day Amid COVID-19
As the country prepares for a Remembrance Day amid a fresh wave of COVID-19 cases, some organizations have raised concern about the toll the pandemic has been taking on army veterans. While some of them have reportedly been facing difficulties in applying for federal support this year due to the pandemic, those who have are said to be wait in long queues. The Canadian government responded to this issue saying that they are hiring more people to deal with the backlog.
