L-3 Communications Holdings (NYSE: LLL) and DigitalGlobe (NYSE:DGI) are both mid-cap aerospace companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, risk, analyst recommendations, earnings, valuation, profitability and institutional ownership.

Valuation and Earnings

This table compares L-3 Communications Holdings and DigitalGlobe’s top-line 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 1.36 $1.32 billion $8.87 21.36
DigitalGlobe $809.90 million 2.67 $402.60 million $0.02 1,738.37

L-3 Communications Holdings has higher revenue and earnings than DigitalGlobe. L-3 Communications Holdings is trading at a lower price-to-earnings ratio than DigitalGlobe, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

L-3 Communications Holdings has a beta of 1.15, indicating that its stock price is 15% more volatile than the S&P 500. Comparatively, DigitalGlobe has a beta of 1.01, indicating that its stock price is 1% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and price targets for L-3 Communications Holdings and DigitalGlobe, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
L-3 Communications Holdings 0 7 5 1 2.54
DigitalGlobe 0 4 1 0 2.20

L-3 Communications Holdings currently has a consensus target price of $182.50, indicating a potential downside of 3.65%. DigitalGlobe has a consensus target price of $33.90, indicating a potential downside of 2.45%. Given DigitalGlobe’s higher probable upside, analysts plainly believe DigitalGlobe is more favorable than L-3 Communications Holdings.

Institutional and Insider Ownership

79.1% of L-3 Communications Holdings shares are held by institutional investors. Comparatively, 96.3% of DigitalGlobe shares are held by institutional investors. 2.9% of L-3 Communications Holdings shares are held by company insiders. Comparatively, 2.3% of DigitalGlobe shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

L-3 Communications Holdings pays an annual dividend of $3.00 per share and has a dividend yield of 1.6%. DigitalGlobe does not pay a dividend. L-3 Communications Holdings pays out 33.8% of its earnings in the form of a dividend. DigitalGlobe has raised its dividend for 13 consecutive years.

Profitability

This table compares L-3 Communications Holdings and DigitalGlobe’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%
DigitalGlobe 0.64% 2.40% 0.97%

Summary

L-3 Communications Holdings beats DigitalGlobe on 12 of the 18 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.

DigitalGlobe Company Profile

DigitalGlobe, Inc. is a provider of Earth imagery, data and analysis. The Company’s imagery solutions and other services support a range of uses, including mission-planning, mapping and analysis, environmental monitoring, oil and gas exploration and infrastructure management. The Company’s imagery solutions and other services are sourced from its own satellite constellation and third-party providers. The Company sells its products and services through a combination of direct and indirect channels, consisting of a global network of resellers, strategic partners and direct enterprise sales to its United States Government and Diversified Commercial customer groups. The Company offers products consisting of imagery from its constellation of satellites, and provides geospatial products and services. The Company processes its imagery to varying levels according to its customers’ specifications and delivers its products using the distribution method.

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