Critical Analysis: Exelis (XLS) vs. Esterline Technologies (ESL)

Exelis (NYSE: XLS) and Esterline Technologies (NYSE:ESL) are both mid-cap aerospace & defense – nec companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, profitability, institutional ownership, earnings, dividends and analyst recommendations.

Insider and Institutional Ownership

92.0% of Esterline Technologies shares are held by institutional investors. 1.4% of Esterline Technologies shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Exelis and Esterline Technologies, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Exelis 0 0 0 0 N/A
Esterline Technologies 2 5 0 0 1.71

Esterline Technologies has a consensus target price of $80.17, indicating a potential upside of 5.48%. Given Esterline Technologies’ higher possible upside, analysts plainly believe Esterline Technologies is more favorable than Exelis.

Profitability

This table compares Exelis and Esterline Technologies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Exelis 7.52% 18.51% 4.87%
Esterline Technologies 5.86% 7.68% 4.35%

Valuation and Earnings

This table compares Exelis and Esterline Technologies’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Exelis N/A N/A N/A $1.23 20.07
Esterline Technologies $2.00 billion 1.13 $117.38 million $4.15 18.31

Esterline Technologies has higher revenue and earnings than Exelis. Esterline Technologies is trading at a lower price-to-earnings ratio than Exelis, indicating that it is currently the more affordable of the two stocks.

Summary

Esterline Technologies beats Exelis on 5 of the 9 factors compared between the two stocks.

Exelis Company Profile

Exelis Inc. (Exelis) is a diversified aerospace, defense, information and services company. The Company delivers mission-critical solutions to military, government and commercial customers in the United States and globally. It operates in two segments: Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance (C4ISR) Electronics and Systems, and Information and Technical Services. Its C4ISR Electronics and Systems segment provides engineered systems and solutions, including: ISR systems; integrated electronic warfare systems; radar and sonar systems; electronic attack and release systems; communications solutions; space systems, and composite aerostructures. The Company’s Information and Technical Services segment provides a range of service solutions: systems integration; network design and development; air traffic management; cyber; intelligence; advanced engineering, and space launch and range-support.

Esterline Technologies Company Profile

Esterline Technologies Corporation is a specialized manufacturing company. The Company designs, manufactures and markets engineered products and systems for application within the industries it serves. The Company operates through three segments: Avionics & Controls, Sensors & Systems, and Advanced Materials. The Company serves aerospace and defense customers. The Company’s Avionics & Controls business segment includes avionics systems, control and communication systems, and interface technologies capabilities. The Company’s Sensors & Systems business segment includes power systems, connection technologies and advanced sensors capabilities. The Company’s Advanced Materials business segment includes engineered materials and defense technologies capabilities. The Company designs and manufactures ruggedized military personal communication equipment, primarily headsets, handsets and field communications.

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