Northrop Grumman Corporation (NYSE: NOC) and General Dynamics Corporation (NYSE:GD) are both large-cap aerospace companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, earnings, valuation, analyst recommendations, profitability, institutional ownership and risk.

Institutional & Insider Ownership

81.5% of Northrop Grumman Corporation shares are owned by institutional investors. Comparatively, 86.2% of General Dynamics Corporation shares are owned by institutional investors. 0.7% of Northrop Grumman Corporation shares are owned by company insiders. Comparatively, 6.7% of General Dynamics Corporation shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and price targets for Northrop Grumman Corporation and General Dynamics Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Northrop Grumman Corporation 0 6 7 1 2.64
General Dynamics Corporation 1 3 8 0 2.58

Northrop Grumman Corporation currently has a consensus target price of $268.34, indicating a potential downside of 0.18%. General Dynamics Corporation has a consensus target price of $205.50, indicating a potential upside of 2.75%. Given General Dynamics Corporation’s higher probable upside, analysts clearly believe General Dynamics Corporation is more favorable than Northrop Grumman Corporation.

Profitability

This table compares Northrop Grumman Corporation and General Dynamics Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Northrop Grumman Corporation 9.20% 39.22% 8.74%
General Dynamics Corporation 9.63% 28.17% 9.31%

Risk and Volatility

Northrop Grumman Corporation has a beta of 0.66, suggesting that its stock price is 34% less volatile than the S&P 500. Comparatively, General Dynamics Corporation has a beta of 0.71, suggesting that its stock price is 29% less volatile than the S&P 500.

Valuation & Earnings

This table compares Northrop Grumman Corporation and General Dynamics Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Northrop Grumman Corporation $25.19 billion 1.86 $3.80 billion $13.09 20.54
General Dynamics Corporation $31.22 billion 1.92 $4.89 billion $9.72 20.58

General Dynamics Corporation has higher revenue and earnings than Northrop Grumman Corporation. Northrop Grumman Corporation is trading at a lower price-to-earnings ratio than General Dynamics Corporation, indicating that it is currently the more affordable of the two stocks.

Dividends

Northrop Grumman Corporation pays an annual dividend of $4.00 per share and has a dividend yield of 1.5%. General Dynamics Corporation pays an annual dividend of $3.36 per share and has a dividend yield of 1.7%. Northrop Grumman Corporation pays out 30.6% of its earnings in the form of a dividend. General Dynamics Corporation pays out 34.6% 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. Northrop Grumman Corporation has raised its dividend for 19 consecutive years and General Dynamics Corporation has raised its dividend for 9 consecutive years.

Summary

General Dynamics Corporation beats Northrop Grumman Corporation on 11 of the 18 factors compared between the two stocks.

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.

General Dynamics Corporation Company Profile

General Dynamics Corporation is a global aerospace and defense company. The Company offers a portfolio of products and services in business aviation; combat vehicles, weapons systems and munitions; information technology (IT) services and C4ISR (command, control, communications, computers, intelligence, surveillance and reconnaissance) solutions, and shipbuilding and ship repair. It operates through four business groups: Aerospace, Combat Systems, Information Systems and Technology, and Marine Systems. Its Aerospace group offers aircraft design; cockpit and cabin systems, and product service and support. Its Combat Systems group offers combat vehicles, weapons systems and munitions. The Information Systems and Technology group provides technologies, products and services in support of various programs. The Marine Systems group is a designer and builder of nuclear-powered submarines, surface combatants and auxiliary and combat-logistics ships.

Receive News & Stock Ratings for Northrop Grumman Corporation Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Northrop Grumman Corporation and related stocks with our FREE daily email newsletter.