Comparing L-3 Communications Holdings (LLL) & Northrop Grumman Corporation (NOC)
L-3 Communications Holdings (NYSE: LLL) and Northrop Grumman Corporation (NYSE:NOC) are both large-cap aerospace companies, but which is the superior stock? We will contrast the two businesses based on the strength of their dividends, valuation, risk, profitability, analyst recommendations, earnings and institutional ownership.
Insider and Institutional Ownership
79.1% of L-3 Communications Holdings shares are owned by institutional investors. Comparatively, 81.5% of Northrop Grumman Corporation shares are owned by institutional investors. 2.9% of L-3 Communications Holdings shares are owned by company insiders. Comparatively, 0.7% of Northrop Grumman Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
This is a summary of recent recommendations for L-3 Communications Holdings and Northrop Grumman Corporation, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|L-3 Communications Holdings||0||7||5||1||2.54|
|Northrop Grumman Corporation||0||6||7||1||2.64|
L-3 Communications Holdings presently has a consensus price target of $182.10, suggesting a potential upside of 1.79%. Northrop Grumman Corporation has a consensus price target of $268.34, suggesting a potential upside of 0.16%. Given L-3 Communications Holdings’ higher probable upside, equities analysts plainly believe L-3 Communications Holdings is more favorable than Northrop Grumman Corporation.
L-3 Communications Holdings pays an annual dividend of $3.00 per share and has a dividend yield of 1.7%. Northrop Grumman Corporation pays an annual dividend of $4.00 per share and has a dividend yield of 1.5%. L-3 Communications Holdings pays out 33.8% of its earnings in the form of a dividend. Northrop Grumman Corporation pays out 30.6% 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. L-3 Communications Holdings has increased its dividend for 13 consecutive years and Northrop Grumman Corporation has increased its dividend for 9 consecutive years. L-3 Communications Holdings is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valuation and Earnings
This table compares L-3 Communications Holdings and Northrop Grumman Corporation’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|L-3 Communications Holdings||$10.90 billion||1.28||$1.32 billion||$8.87||20.17|
|Northrop Grumman Corporation||$25.19 billion||1.85||$3.80 billion||$13.09||20.47|
Northrop Grumman Corporation has higher revenue and earnings than L-3 Communications Holdings. L-3 Communications Holdings is trading at a lower price-to-earnings ratio than Northrop Grumman Corporation, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
L-3 Communications Holdings has a beta of 1.15, meaning that its share price is 15% more volatile than the S&P 500. Comparatively, Northrop Grumman Corporation has a beta of 0.66, meaning that its share price is 34% less volatile than the S&P 500.
This table compares L-3 Communications Holdings and Northrop Grumman Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|L-3 Communications Holdings||6.44%||14.15%||5.60%|
|Northrop Grumman Corporation||9.20%||39.22%||8.74%|
Northrop Grumman Corporation beats L-3 Communications Holdings on 12 of the 17 factors compared between the two stocks.
L-3 Communications Holdings Company Profile
L3 Technologies, Inc., formerly L-3 Communications Holdings, Inc., is a prime contractor in Intelligence, Surveillance and Reconnaissance (ISR) systems, aircraft sustainment, simulation and training, night vision and image intensification equipment and security and detection systems. The Company provides a broad range of communication and electronic systems and products used on military and commercial platforms. It operates through four segments: Electronic Systems, Aerospace Systems, Communication Systems and Sensor Systems. Electronic Systems provides a broad range of products and services for military and commercial customers in several niche markets across several business areas. Aerospace Systems delivers integrated solutions and provides engineering, modernization, upgrade, sustainment, and maintenance and logistics support. Communication Systems delivers products and services for the global communications market. Sensor Systems provides diverse sensor technologies.
Northrop Grumman Corporation 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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