Lockheed Martin (NYSE: LMT) and Northrop Grumman (NYSE:NOC) are both large-cap aerospace companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, analyst recommendations, valuation, earnings, risk, institutional ownership and profitability.
Institutional and Insider Ownership
78.7% of Lockheed Martin shares are owned by institutional investors. Comparatively, 81.2% of Northrop Grumman shares are owned by institutional investors. 0.4% of Lockheed Martin shares are owned by insiders. Comparatively, 0.7% of Northrop Grumman shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Lockheed Martin has a beta of 0.73, suggesting that its share price is 27% less volatile than the S&P 500. Comparatively, Northrop Grumman has a beta of 0.82, suggesting that its share price is 18% less volatile than the S&P 500.
Valuation & Earnings
This table compares Lockheed Martin and Northrop Grumman’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Lockheed Martin||$51.05 billion||2.02||$2.00 billion||$6.83||52.79|
|Northrop Grumman||$25.80 billion||2.40||$2.02 billion||$11.47||31.04|
Northrop Grumman has lower revenue, but higher earnings than Lockheed Martin. Northrop Grumman is trading at a lower price-to-earnings ratio than Lockheed Martin, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of recent ratings and recommmendations for Lockheed Martin and Northrop Grumman, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Lockheed Martin currently has a consensus target price of $375.36, indicating a potential upside of 4.11%. Northrop Grumman has a consensus target price of $330.24, indicating a potential downside of 7.24%. Given Lockheed Martin’s higher possible upside, analysts clearly believe Lockheed Martin is more favorable than Northrop Grumman.
This table compares Lockheed Martin and Northrop Grumman’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Lockheed Martin pays an annual dividend of $8.00 per share and has a dividend yield of 2.2%. Northrop Grumman pays an annual dividend of $4.00 per share and has a dividend yield of 1.1%. Lockheed Martin pays out 117.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Northrop Grumman pays out 34.9% of its earnings in the form of a dividend. Lockheed Martin has raised its dividend for 15 consecutive years and Northrop Grumman has raised its dividend for 10 consecutive years. Lockheed Martin is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Northrop Grumman beats Lockheed Martin on 12 of the 17 factors compared between the two stocks.
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.
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.
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