General Dynamics Corporation (NYSE: GD) and Cubic Corporation (NYSE:CUB) are both aerospace companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, risk, earnings, profitability, analyst recommendations and valuation.

Profitability

This table compares General Dynamics Corporation and Cubic Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
General Dynamics Corporation 9.63% 28.17% 9.31%
Cubic Corporation -2.20% -4.74% -2.22%

Dividends

General Dynamics Corporation pays an annual dividend of $3.36 per share and has a dividend yield of 1.7%. Cubic Corporation pays an annual dividend of $0.27 per share and has a dividend yield of 0.6%. General Dynamics Corporation pays out 34.6% of its earnings in the form of a dividend. Cubic Corporation pays out -22.7% 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. General Dynamics Corporation has raised its dividend for 19 consecutive years. General Dynamics Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

86.2% of General Dynamics Corporation shares are held by institutional investors. Comparatively, 88.8% of Cubic Corporation shares are held by institutional investors. 6.7% of General Dynamics Corporation shares are held by company insiders. Comparatively, 7.9% of Cubic Corporation shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations for General Dynamics Corporation and Cubic Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
General Dynamics Corporation 1 3 8 0 2.58
Cubic Corporation 0 0 4 0 3.00

General Dynamics Corporation currently has a consensus target price of $205.50, indicating a potential upside of 3.65%. Cubic Corporation has a consensus target price of $52.25, indicating a potential upside of 17.81%. Given Cubic Corporation’s stronger consensus rating and higher probable upside, analysts plainly believe Cubic Corporation is more favorable than General Dynamics Corporation.

Volatility & Risk

General Dynamics Corporation has a beta of 0.71, meaning that its share price is 29% less volatile than the S&P 500. Comparatively, Cubic Corporation has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.

Valuation & Earnings

This table compares General Dynamics Corporation and Cubic Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
General Dynamics Corporation $31.22 billion 1.90 $4.89 billion $9.72 20.40
Cubic Corporation $1.45 billion 0.83 $53.94 million ($1.19) -37.27

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

Summary

General Dynamics Corporation beats Cubic Corporation on 10 of the 16 factors compared between the two stocks.

General Dynamics Corporation Company Profile

General Dynamics Corporation is a global aerospace and defense company. The Company offers a portfolio of products and services in business aviation; combat vehicles, weapons systems and munitions; information technology (IT) services and C4ISR (command, control, communications, computers, intelligence, surveillance and reconnaissance) solutions, and shipbuilding and ship repair. It operates through four business groups: Aerospace, Combat Systems, Information Systems and Technology, and Marine Systems. Its Aerospace group offers aircraft design; cockpit and cabin systems, and product service and support. Its Combat Systems group offers combat vehicles, weapons systems and munitions. The Information Systems and Technology group provides technologies, products and services in support of various programs. The Marine Systems group is a designer and builder of nuclear-powered submarines, surface combatants and auxiliary and combat-logistics ships.

Cubic Corporation Company Profile

Cubic Corporation (Cubic) designs, integrates and operates systems, products and services that provide situational awareness for its customers in the transportation and defense industries. The Company operates in three business segments across the global transportation and defense markets, which include Cubic Transportation Systems (CTS), Cubic Global Defense (CGD) and Cubic Global Defense Services (CGD Services). The Company’s CTS segment is a systems integrator of payment and information technology and services for travel solutions. The Company’s CGD Systems is focused on two primary lines of business: training systems and secure communications (SC) products. The Company’s CGD Services segment is a provider of training, operations, intelligence, maintenance, technical and other support services to the United States government and its agencies and allied nations. It also provides cross-domain hardware solutions to address multi-level security challenges across common networks.

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