Aerojet Rocketdyne Holdings (NYSE: AJRD) and Northrop Grumman Corporation (NYSE:NOC) are both 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, profitabiliy and institutional ownership.

Institutional and Insider Ownership

93.3% of Aerojet Rocketdyne Holdings shares are held by institutional investors. Comparatively, 82.2% of Northrop Grumman Corporation shares are held by institutional investors. 2.7% of Aerojet Rocketdyne Holdings shares are held by company insiders. Comparatively, 0.7% of Northrop Grumman Corporation 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.

Volatility & Risk

Aerojet Rocketdyne Holdings has a beta of 1.51, indicating that its stock price is 51% more volatile than the S&P 500. Comparatively, Northrop Grumman Corporation has a beta of 0.69, indicating that its stock price is 31% less volatile than the S&P 500.

Dividends

Northrop Grumman Corporation pays an annual dividend of $4.00 per share and has a dividend yield of 1.5%. Aerojet Rocketdyne Holdings does not pay a dividend. Northrop Grumman Corporation pays out 31.3% of its earnings in the form of a dividend. Aerojet Rocketdyne Holdings has raised its dividend for 9 consecutive years.

Profitability

This table compares Aerojet Rocketdyne Holdings and Northrop Grumman Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Aerojet Rocketdyne Holdings 1.04% -408.10% 2.44%
Northrop Grumman Corporation 9.20% 38.20% 8.57%

Analyst Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Aerojet Rocketdyne Holdings 0 0 2 0 3.00
Northrop Grumman Corporation 0 4 7 0 2.64

Aerojet Rocketdyne Holdings currently has a consensus target price of $25.50, indicating a potential upside of 22.42%. Northrop Grumman Corporation has a consensus target price of $249.01, indicating a potential downside of 3.70%. Given Aerojet Rocketdyne Holdings’ stronger consensus rating and higher probable upside, research analysts plainly believe Aerojet Rocketdyne Holdings is more favorable than Northrop Grumman Corporation.

Valuation and Earnings

This table compares Aerojet Rocketdyne 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
Aerojet Rocketdyne Holdings $1.81 billion 0.86 $159.30 million $0.25 83.32
Northrop Grumman Corporation $24.82 billion 1.82 $3.74 billion $12.79 20.22

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

Summary

Northrop Grumman Corporation beats Aerojet Rocketdyne Holdings on 9 of the 17 factors compared between the two stocks.

Aerojet Rocketdyne Holdings Company Profile

GenCorp Inc., incorporated in 1915, is a manufacturer of aerospace and defense products and systems with a real estate segment that includes activities related to the re-zoning, entitlement, sale, and leasing of its excess real estate assets. The Company develops and manufactures propulsion systems for defense and space applications, and armaments for precision tactical and long range weapon systems applications. The Company operates in two segments: Aerospace and Defense, and Real Estate. Its defense system products include liquid, solid, and air-breathing propulsion systems and components. Its space system products include liquid, solid, and electric propulsion systems and components. In June 2013, United Technologies Corp announced it has closed on the sale of substantially all operations of its Pratt & Whitney Rocketdyne unit to GenCorp Inc.

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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