Financial Analysis: United Technologies (UTX) and Heico (HEI)

United Technologies (NYSE: UTX) and Heico (NYSE:HEI) are both multi-sector conglomerates companies, but which is the better stock? We will compare the two businesses based on the strength of their institutional ownership, risk, valuation, earnings, analyst recommendations, profitability and dividends.

Institutional and Insider Ownership

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81.9% of United Technologies shares are owned by institutional investors. Comparatively, 22.5% of Heico shares are owned by institutional investors. 0.2% of United Technologies shares are owned by insiders. Comparatively, 9.9% of Heico shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares United Technologies and Heico’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
United Technologies $59.84 billion 1.64 $4.55 billion $6.65 18.45
Heico $1.52 billion 6.09 $185.98 million $1.69 51.99

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

Analyst Ratings

This is a summary of current ratings and target prices for United Technologies and Heico, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
United Technologies 0 5 11 0 2.69
Heico 0 3 5 0 2.63

United Technologies currently has a consensus price target of $139.25, indicating a potential upside of 13.48%. Heico has a consensus price target of $85.08, indicating a potential downside of 3.17%. Given United Technologies’ stronger consensus rating and higher probable upside, equities analysts clearly believe United Technologies is more favorable than Heico.

Volatility & Risk

United Technologies has a beta of 1.08, meaning that its stock price is 8% more volatile than the S&P 500. Comparatively, Heico has a beta of 0.71, meaning that its stock price is 29% less volatile than the S&P 500.

Profitability

This table compares United Technologies and Heico’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
United Technologies 7.61% 17.35% 5.62%
Heico 13.26% 14.80% 7.67%

Dividends

United Technologies pays an annual dividend of $2.80 per share and has a dividend yield of 2.3%. Heico pays an annual dividend of $0.14 per share and has a dividend yield of 0.2%. United Technologies pays out 42.1% of its earnings in the form of a dividend. Heico pays out 8.3% 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. United Technologies has increased its dividend for 6 consecutive years and Heico has increased its dividend for 8 consecutive years.

Summary

United Technologies beats Heico on 10 of the 17 factors compared between the two stocks.

United Technologies Company Profile

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.

Heico Company Profile

HEICO Corporation manufactures Federal Aviation Administration (FAA)-approved jet engine and aircraft component replacement parts, other than the original equipment manufacturers (OEMs) and their subcontractors. The Company also manufactures various types of electronic equipment for the aviation, medical, telecommunications and electronics industries. It operates through two segments: Flight Support Group (FSG) and Electronic Technologies Group (ETG). The FSG segment consists of HEICO Aerospace Holdings Corp. and HEICO Flight Support Corp. and their collective subsidiaries. The FSG segment designs and manufactures jet engine and aircraft component replacement parts. The ETG segment consists of HEICO Electronic Technologies Corp. and its subsidiaries. The ETG segment designs and produces mission-critical subcomponents for various markets, which are utilized in larger systems, including targeting, tracking, identification, testing, communications, telecom and computer systems.

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