Critical Comparison: AAR (NYSE:AIR) & Moog (NYSE:MOG.B)

AAR (NYSE:AIR) and Moog (NYSE:MOG.B) are both aerospace companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, institutional ownership, profitability, dividends, valuation, analyst recommendations and earnings.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for AAR and Moog, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AAR	0	2	4	1	2.86
Moog	0	0	0	0	0.00

AAR presently has a consensus price target of $131.20, suggesting a potential upside of 16.58%. Given AAR’s stronger consensus rating and higher possible upside, research analysts plainly believe AAR is more favorable than Moog.

Dividends

AAR pays an annual dividend of $0.30 per share and has a dividend yield of 0.3%. Moog pays an annual dividend of $1.20 per share and has a dividend yield of 0.3%. AAR pays out 6.7% of its earnings in the form of a dividend. Moog pays out 13.5% 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.

Valuation and Earnings

This table compares AAR and Moog”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AAR	$3.13 billion	1.43	$12.50 million	$4.51	24.95
Moog	$3.86 billion	2.83	$235.03 million	$8.89	38.84

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

Profitability

This table compares AAR and Moog’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AAR	5.46%	12.39%	5.68%
Moog	6.83%	16.11%	7.15%

Risk & Volatility

AAR has a beta of 1.14, suggesting that its stock price is 14% more volatile than the S&P 500. Comparatively, Moog has a beta of 0.72, suggesting that its stock price is 28% less volatile than the S&P 500.

Insider & Institutional Ownership

90.7% of AAR shares are owned by institutional investors. Comparatively, 8.1% of Moog shares are owned by institutional investors. 3.6% of AAR shares are owned by company insiders. Comparatively, 2.4% of Moog shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

Moog beats AAR on 9 of the 17 factors compared between the two stocks.

About AAR

AAR Corp. provides products and services to commercial aviation, government, and defense markets worldwide. The Parts Supply segment leases and sells aircraft components and replacement parts. The Repair & Engineering segment provides airframe maintenance services, such as airframe inspection, painting, line maintenance, airframe modification, structural repair, avionics service and installation, exterior and interior refurbishment, and engineering and support services; component repair services comprising maintenance, repair, and overhaul (MRO) services, engine and airframe accessories, and interior refurbishment; and landing gear overhaul services, including repair services on wheels and brakes. This segment also develops specific aircraft components and parts; and designs proprietary designated engineering representative repairs. The Integrated Solutions segment engages in the fleet management and operation of customer-owned aircraft; provision of supply chain logistics services, such as material planning, sourcing, logistics, information and program management, and parts and component repair and overhaul services; and flight hour component inventory and repair services. In addition, the segment provides integrated software solutions comprising Trax, a cloud-based electronic enterprise resource platform, as well as a suite of paperless mobility apps for automating MRO workflows. The Expeditionary Services segment designs, manufactures, and repairs transportation pallets; and containers and shelters for military and humanitarian tactical deployment activities, including armories, supply and parts storage, refrigeration systems, tactical operation centers, briefing rooms, laundry and kitchen facilities, water treatment, and sleeping quarters, as well as engages in provision of engineering, design, and system integration services for specialized command and control systems. AAR Corp. was founded in 1951 and is headquartered in Wood Dale, Illinois.

About Moog

Moog Inc. designs, manufactures, and integrates precision motion and fluid controls and systems for original equipment manufacturers and end users in the aerospace, defense, and industrial markets worldwide. The company's Aircrafts Controls segment offers primary and secondary flight controls for military and commercial aircrafts; aftermarket support services; and ground-based navigation aids. Its Space and Defense Controls segment provides controls for satellites, space vehicles, launch vehicles, armored combat vehicles, tactical and strategic missiles, security and surveillance, and other defense applications; and gun aiming, stabilization, and automatic ammunition loading for armored combat vehicles. This segment also offers steering tactical and strategic missiles; and designs, builds, and integrates weapon stores management systems for light attack aerial reconnaissance, ground, and sea platforms. The company's Industrial Systems segment provides systems for applications in injection and blow molding machinery, metal forming presses, and heavy industry customers in steel and aluminum production; and supplies solutions for power generation applications, electromechanical motion simulation bases, medical training simulators, and custom test systems and controls. This segment also offers systems and components for applications in oil and gas exploration and production; components for wind turbine applications; and components and systems for diagnostic imaging CT scan medical equipment, sleep apnea equipment, oxygen concentrators, infusion therapy, and enteral clinical nutrition. The company was founded in 1951 and is headquartered in East Aurora, New York.