Elbit Systems (NASDAQ: ESLT) and Northrop Grumman (NYSE:NOC) are both aerospace companies, but which is the superior investment? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, institutional ownership, earnings, dividends, profitability and risk.
Valuation and Earnings
This table compares Elbit Systems and Northrop Grumman’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Elbit Systems||$3.26 billion||1.82||$236.90 million||$5.54||25.02|
|Northrop Grumman||$25.80 billion||2.28||$2.02 billion||$11.47||29.44|
Volatility & Risk
Elbit Systems has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500. Comparatively, Northrop Grumman has a beta of 0.82, meaning that its share price is 18% less volatile than the S&P 500.
This is a breakdown of current recommendations and price targets for Elbit Systems and Northrop Grumman, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Elbit Systems presently has a consensus target price of $110.00, suggesting a potential downside of 20.63%. Northrop Grumman has a consensus target price of $320.16, suggesting a potential downside of 5.18%. Given Northrop Grumman’s stronger consensus rating and higher possible upside, analysts plainly believe Northrop Grumman is more favorable than Elbit Systems.
This table compares Elbit Systems and Northrop Grumman’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Elbit Systems pays an annual dividend of $1.76 per share and has a dividend yield of 1.3%. Northrop Grumman pays an annual dividend of $4.00 per share and has a dividend yield of 1.2%. Elbit Systems pays out 31.8% of its earnings in the form of a dividend. Northrop Grumman pays out 34.9% 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. Elbit Systems has increased its dividend for 10 consecutive years. Elbit Systems is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Insider & Institutional Ownership
11.2% of Elbit Systems shares are owned by institutional investors. Comparatively, 81.2% of Northrop Grumman shares are owned by institutional investors. 0.8% of Elbit Systems shares are owned by insiders. Comparatively, 0.7% of Northrop Grumman shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Northrop Grumman beats Elbit Systems on 13 of the 17 factors compared between the two stocks.
Elbit Systems Company Profile
Elbit Systems Ltd. is an international technology company engaged in a range of programs across the world. The Company develops and supplies a portfolio of airborne, land and naval systems and products for defense, homeland security and commercial aviation applications. Its systems and products are installed on new platforms, and it also performs platform modernization programs. In addition, it provides a range of support services. The Company’s activities include military aircraft and helicopter systems; helmet mounted systems; commercial aviation systems and aerostructures; unmanned aircraft and unmanned surface vessels; land vehicle systems; command, control, communications, computer and intelligence (C4I) systems; intelligence and cyber systems; electro-optic and countermeasures systems; electronic warfare and signal intelligence systems, and various commercial activities. It operates primarily in the defense and homeland security arenas.
Northrop Grumman 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.
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