Lockheed Martin (NYSE: LMT) and United Technologies (NYSE:UTX) are both large-cap industrials companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, profitability, dividends, risk, valuation, earnings and institutional ownership.

Risk & Volatility

Lockheed Martin has a beta of 0.58, meaning that its stock price is 42% less volatile than the S&P 500. Comparatively, United Technologies has a beta of 1.07, meaning that its stock price is 7% more volatile than the S&P 500.

Profitability

This table compares Lockheed Martin and United Technologies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lockheed Martin 7.31% 221.41% 7.65%
United Technologies 8.79% 17.66% 5.72%

Dividends

Lockheed Martin pays an annual dividend of $8.00 per share and has a dividend yield of 2.5%. United Technologies pays an annual dividend of $2.80 per share and has a dividend yield of 2.2%. Lockheed Martin pays out 64.9% of its earnings in the form of a dividend. United Technologies pays out 43.3% 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. Lockheed Martin has increased its dividend for 14 consecutive years and United Technologies has increased its dividend for 5 consecutive years. Lockheed Martin is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Lockheed Martin and United Technologies’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Lockheed Martin $47.25 billion 1.95 $5.30 billion $12.33 26.12
United Technologies $57.24 billion 1.79 $5.06 billion $6.46 19.83

Lockheed Martin has higher earnings, but lower revenue than United Technologies. United Technologies is trading at a lower price-to-earnings ratio than Lockheed Martin, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

78.8% of Lockheed Martin shares are held by institutional investors. Comparatively, 80.1% of United Technologies shares are held by institutional investors. 0.4% of Lockheed Martin shares are held by insiders. Comparatively, 0.2% of United Technologies shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Lockheed Martin and United Technologies, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lockheed Martin 0 4 8 0 2.67
United Technologies 0 10 4 0 2.29

Lockheed Martin presently has a consensus target price of $322.83, suggesting a potential upside of 0.23%. United Technologies has a consensus target price of $126.31, suggesting a potential downside of 1.41%. Given Lockheed Martin’s stronger consensus rating and higher probable upside, analysts clearly believe Lockheed Martin is more favorable than United Technologies.

Summary

Lockheed Martin beats United Technologies on 12 of the 17 factors compared between the two stocks.

About Lockheed Martin

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.

About United Technologies

United Technologies Corporation is engaged in providing high technology products and services to the building systems and aerospace industries around the world. The Company operates through four segments: Otis; UTC Climate, Controls & Security; Pratt & Whitney, and UTC Aerospace Systems. Otis operates as an elevator and escalator manufacturing, installation and service company. UTC Climate, Controls & Security segment is engaged in providing heating, ventilating, air conditioning (HVAC) and refrigeration solutions. The Pratt & Whitney segment supplies aircraft engines for the commercial, military, business jet and general aviation markets. Pratt & Whitney segment provides fleet management services and aftermarket maintenance, repair and overhaul services. The UTC Aerospace Systems segment provides aerospace products and aftermarket service solutions for aircraft manufacturers, airlines, regional, business and general aviation markets, military, space and undersea operations.

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