Rockwell Collins (NYSE: COL) and Northrop Grumman Corporation (NYSE:NOC) are both large-cap aerospace companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, earnings, dividends, institutional ownership, analyst recommendations, risk and profitability.

Dividends

Rockwell Collins pays an annual dividend of $1.32 per share and has a dividend yield of 1.0%. Northrop Grumman Corporation pays an annual dividend of $4.00 per share and has a dividend yield of 1.5%. Rockwell Collins pays out 26.0% of its earnings in the form of a dividend. Northrop Grumman Corporation pays out 30.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Rockwell Collins has increased its dividend for 9 consecutive years and Northrop Grumman Corporation has increased its dividend for 2 consecutive years.

Volatility & Risk

Rockwell Collins has a beta of 0.75, indicating that its stock price is 25% less volatile than the S&P 500. Comparatively, Northrop Grumman Corporation has a beta of 0.66, indicating that its stock price is 34% less volatile than the S&P 500.

Insider & Institutional Ownership

77.9% of Rockwell Collins shares are owned by institutional investors. Comparatively, 81.5% of Northrop Grumman Corporation shares are owned by institutional investors. 1.5% of Rockwell Collins shares are owned by insiders. Comparatively, 0.7% of Northrop Grumman Corporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings and target prices for Rockwell Collins and Northrop Grumman Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Rockwell Collins 1 14 5 0 2.20
Northrop Grumman Corporation 0 6 7 1 2.64

Rockwell Collins currently has a consensus target price of $119.56, suggesting a potential downside of 8.70%. Northrop Grumman Corporation has a consensus target price of $268.34, suggesting a potential upside of 0.33%. Given Northrop Grumman Corporation’s stronger consensus rating and higher possible upside, analysts clearly believe Northrop Grumman Corporation is more favorable than Rockwell Collins.

Profitability

This table compares Rockwell Collins and Northrop Grumman Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Rockwell Collins 11.52% 26.20% 7.76%
Northrop Grumman Corporation 9.20% 39.22% 8.74%

Valuation & Earnings

This table compares Rockwell Collins and Northrop Grumman Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Rockwell Collins $6.07 billion 3.51 $1.35 billion $5.07 25.83
Northrop Grumman Corporation $25.19 billion 1.85 $3.80 billion $13.09 20.43

Northrop Grumman Corporation has higher revenue and earnings than Rockwell Collins. Northrop Grumman Corporation is trading at a lower price-to-earnings ratio than Rockwell Collins, indicating that it is currently the more affordable of the two stocks.

Summary

Northrop Grumman Corporation beats Rockwell Collins on 11 of the 18 factors compared between the two stocks.

Rockwell Collins Company Profile

Rockwell Collins, Inc. designs, produces and supports communications and aviation systems for commercial and military customers. The Company provides information management services through voice and data communication networks and solutions across the world. The Company operates through three segments: Commercial Systems, Government Systems and Information Management Services. The Commercial Systems segment supplies aviation electronics systems, products and services to customers located throughout the world. The Government Systems segment provides a range of electronic products, systems and services to customers including the United States Department of Defense, various ministries of defense, other government agencies and defense contractors around the world. The Information Management Services segment provides communications services, systems integration and security solutions across the aviation, airport, rail and nuclear security markets.

Northrop Grumman Corporation Company Profile

Northrop Grumman Corporation is a global security company. The Company provides products, systems and solutions in autonomous systems; cyber; command, control, communications and computers, intelligence, surveillance and reconnaissance (C4ISR); strike, and logistics and modernization. The Company’s segments include Aerospace Systems, Mission Systems and Technology Services. The Company’s Aerospace Systems segment is engaged in the design, development, integration and production of manned aircraft, autonomous systems, spacecraft, high-energy laser systems, microelectronics and other systems/subsystems. The Mission Systems segment offers mission solutions and multifunction systems for Department of Defense (DoD), intelligence community, international, federal civil and commercial customers. The Technology Services segment provides logistics solutions supporting the full life cycle of platforms and systems for global defense and federal-civil customers.

Receive News & Ratings for Rockwell Collins Inc. Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Rockwell Collins Inc. and related companies with MarketBeat.com's FREE daily email newsletter.