Northrop Grumman (NYSE: NOC) and Lockheed Martin (NYSE:LMT) are both large-cap industrials companies, but which is the superior stock? We will compare the two businesses based on the strength of their valuation, institutional ownership, analyst recommendations, profitability, dividends, risk and earnings.
Valuation and Earnings
This table compares Northrop Grumman and Lockheed Martin’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Northrop Grumman||$25.80 billion||2.29||$2.02 billion||$13.18||25.80|
|Lockheed Martin||$51.05 billion||1.86||$2.00 billion||$13.09||25.34|
Volatility & Risk
Northrop Grumman has a beta of 0.78, suggesting that its stock price is 22% less volatile than the S&P 500. Comparatively, Lockheed Martin has a beta of 0.72, suggesting that its stock price is 28% less volatile than the S&P 500.
This table compares Northrop Grumman and Lockheed Martin’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Northrop Grumman pays an annual dividend of $4.40 per share and has a dividend yield of 1.3%. Lockheed Martin pays an annual dividend of $8.00 per share and has a dividend yield of 2.4%. Northrop Grumman pays out 33.4% of its earnings in the form of a dividend. Lockheed Martin pays out 61.1% 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. Northrop Grumman has raised its dividend for 15 consecutive years and Lockheed Martin has raised its dividend for 10 consecutive years.
Insider and Institutional Ownership
80.7% of Northrop Grumman shares are held by institutional investors. Comparatively, 78.4% of Lockheed Martin shares are held by institutional investors. 0.7% of Northrop Grumman shares are held by company insiders. Comparatively, 0.4% of Lockheed Martin shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
This is a breakdown of current ratings and price targets for Northrop Grumman and Lockheed Martin, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Northrop Grumman presently has a consensus target price of $359.54, suggesting a potential upside of 5.72%. Lockheed Martin has a consensus target price of $378.64, suggesting a potential upside of 14.16%. Given Lockheed Martin’s higher probable upside, analysts clearly believe Lockheed Martin is more favorable than Northrop Grumman.
Northrop Grumman beats Lockheed Martin on 13 of the 17 factors compared between the two stocks.
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.
Lockheed Martin Company Profile
Lockheed Martin Corporation is a security and aerospace company. The Company operates through four segments. Aeronautics segment is engaged in the research, design, development, manufacture, integration, sustainment, support and upgrade of military aircraft, including combat and air mobility aircraft, unmanned air vehicles and related technologies. Missiles and Fire Control segment provides air and missile defense systems; fire control systems; manned and unmanned ground vehicles, and energy management solutions. Rotary and Mission Systems segment provides design, manufacture, service and support for a range of military and civil helicopters; mission systems and sensors for rotary and fixed-wing aircraft; simulation and training services, and unmanned systems and technologies, among others. Space Systems segment is engaged in the research and development, design, engineering and production of satellites, strategic and defensive missile systems and space transportation systems.
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