Hexcel Corporation (HXL) vs. Kratos Defense & Security Solutions (KTOS) Critical Review
Hexcel Corporation (NYSE: HXL) and Kratos Defense & Security Solutions (NASDAQ:KTOS) are both aerospace companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, valuation, institutional ownership, risk, dividends, earnings and analyst recommendations.
Insider & Institutional Ownership
96.7% of Hexcel Corporation shares are held by institutional investors. Comparatively, 61.8% of Kratos Defense & Security Solutions shares are held by institutional investors. 2.1% of Hexcel Corporation shares are held by company insiders. Comparatively, 23.2% of Kratos Defense & Security Solutions shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Hexcel Corporation pays an annual dividend of $0.50 per share and has a dividend yield of 0.8%. Kratos Defense & Security Solutions does not pay a dividend. Hexcel Corporation pays out 18.1% of its earnings in the form of a dividend.
This is a summary of current ratings and recommmendations for Hexcel Corporation and Kratos Defense & Security Solutions, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Kratos Defense & Security Solutions||0||2||5||0||2.71|
Hexcel Corporation presently has a consensus price target of $59.20, indicating a potential downside of 5.52%. Kratos Defense & Security Solutions has a consensus price target of $12.89, indicating a potential upside of 7.62%. Given Kratos Defense & Security Solutions’ stronger consensus rating and higher possible upside, analysts clearly believe Kratos Defense & Security Solutions is more favorable than Hexcel Corporation.
Earnings & Valuation
This table compares Hexcel Corporation and Kratos Defense & Security Solutions’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Hexcel Corporation||$2.00 billion||2.81||$249.80 million||$2.77||22.62|
|Kratos Defense & Security Solutions||$668.70 million||1.85||-$60.50 million||($0.32)||-37.44|
Hexcel Corporation has higher revenue and earnings than Kratos Defense & Security Solutions. Kratos Defense & Security Solutions is trading at a lower price-to-earnings ratio than Hexcel Corporation, indicating that it is currently the more affordable of the two stocks.
This table compares Hexcel Corporation and Kratos Defense & Security Solutions’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Kratos Defense & Security Solutions||-3.39%||-1.40%||-0.48%|
Volatility and Risk
Hexcel Corporation has a beta of 1.1, indicating that its share price is 10% more volatile than the S&P 500. Comparatively, Kratos Defense & Security Solutions has a beta of 1.91, indicating that its share price is 91% more volatile than the S&P 500.
Hexcel Corporation beats Kratos Defense & Security Solutions on 10 of the 15 factors compared between the two stocks.
About Hexcel Corporation
Hexcel Corporation is a composites company. The Company develops, manufactures, and markets lightweight, structural materials, including carbon fibers, specialty reinforcements, prepregs and other fiber-reinforced matrix materials, honeycomb, adhesives, engineered honeycomb and structures, for use in Commercial Aerospace, Space and Defense and Industrial markets. It operates in two segments: Composite Materials and Engineered Products. The Composite Materials segment consists of its carbon fiber, specialty reinforcements, resins, prepregs and other fiber-reinforced matrix materials, and honeycomb core product lines. The Engineered Products segment consists of lightweight structures, molded components, engineered core and honeycomb products with added functionality. Its products are used in a range of end applications, such as commercial and military aircraft, space launch vehicles and satellites, wind turbine blades, automotive, and recreational products.
About Kratos Defense & Security Solutions
Kratos Defense & Security Solutions, Inc. is a technology, intellectual property and proprietary product and solution company focused on the United States and its allies’ national security. The Kratos Government Solutions segment includes the operations of Defense Rocket Support Services, Microwave Electronics Division, Technical and Training Solutions, and Modular Systems, which provide technology-based defense solutions, involving products and services, with the focus relating to the nation’s Command, Control, Communications, Computing, Combat Systems, Intelligence, Surveillance and Reconnaissance requirements. The Unmanned Systems segment includes its unmanned aerial, ground, seaborne and command, control and communications system business. The Public Safety & Security segment provides integrated solutions for homeland security, public safety, critical infrastructure, and security and surveillance systems for government and commercial applications.
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