Northrop Grumman (NYSE: NOC) and Harris (NYSE:HRS) are both large-cap aerospace companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, earnings, dividends, profitability, risk and institutional ownership.
Volatility & Risk
Northrop Grumman has a beta of 0.78, meaning that its share price is 22% less volatile than the S&P 500. Comparatively, Harris has a beta of 1.27, meaning that its share price is 27% more volatile than the S&P 500.
This table compares Northrop Grumman and Harris’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Valuation & Earnings
This table compares Northrop Grumman and Harris’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Northrop Grumman||$25.80 billion||2.40||$2.02 billion||$13.28||26.73|
|Harris||$5.90 billion||3.36||$553.00 million||$5.53||30.19|
Northrop Grumman has higher revenue and earnings than Harris. Northrop Grumman is trading at a lower price-to-earnings ratio than Harris, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
80.8% of Northrop Grumman shares are held by institutional investors. Comparatively, 84.9% of Harris shares are held by institutional investors. 0.6% of Northrop Grumman shares are held by company insiders. Comparatively, 1.9% of Harris shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Northrop Grumman pays an annual dividend of $4.40 per share and has a dividend yield of 1.2%. Harris pays an annual dividend of $2.28 per share and has a dividend yield of 1.4%. Northrop Grumman pays out 33.1% of its earnings in the form of a dividend. Harris pays out 41.2% 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. Northrop Grumman has raised its dividend for 10 consecutive years and Harris has raised its dividend for 16 consecutive years. Harris is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This is a breakdown of current ratings and recommmendations for Northrop Grumman and Harris, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Northrop Grumman presently has a consensus target price of $363.36, suggesting a potential upside of 2.34%. Harris has a consensus target price of $169.88, suggesting a potential upside of 1.75%. Given Northrop Grumman’s higher possible upside, research analysts clearly believe Northrop Grumman is more favorable than Harris.
Harris beats Northrop Grumman on 9 of the 17 factors compared between the two stocks.
Northrop Grumman Company Profile
Northrop Grumman Corporation operates as a security company for government and commercial customers worldwide. It 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 operates through three segments: Aerospace Systems, Mission Systems, and Technology Services. The Aerospace Systems segment designs, develops, integrates, and produces manned aircraft, autonomous systems, spacecraft, high-energy laser systems, microelectronics, and other systems/subsystems. This segment sells its products primarily to the Department of Defense (DoD) and other U.S. government agencies for use in various areas, including intelligence, surveillance, and reconnaissance; strike operations; communications; earth observation; and space science and exploration. The Mission Systems segment offers mission solutions and multifunction systems, including C4ISR systems; radar, electro-optical/infrared, and acoustic sensors; electronic warfare systems; cyber solutions; space systems; intelligence processing systems; air and missile defense integration; navigation; and shipboard missile and encapsulated payload launch systems for the DoD, intelligence community, international, federal-civil, and commercial customers. The Technology Services segment provides software and system sustainment, training, and integrated logistics support solutions, as well as engages in the modernization of platforms and associated subsystems. Northrop Grumman Corporation was founded in 1939 and is based in Falls Church, Virginia.
Harris Company Profile
Harris Corporation provides technology-based solutions that solve government and commercial customers' mission-critical challenges in the United States and internationally. The company operates in three segments: Communication Systems, Electronic Systems, and Space and Intelligence Systems. It designs, develops, and manufactures radio communications products and systems, including single channel ground and airborne radio systems, 2-channel vehicular radio systems, multiband manpack and handheld radios, multi-channel manpack and airborne radios, and single-channel airborne radios, as well as wideband rifleman team, ground, and high frequency manpack radios. The company also offers secure communications systems and equipment, including Internet protocol based voice and data communications systems, as well as single-band land mobile radio terminals and multiband radios comprising a handheld radio and a full-spectrum mobile radio for vehicles. In addition, it provides earth observation, environmental, exploration, geospatial, space protection, and intelligence solutions, such as sensors and payloads, as well as ground processing and information analytics for security, defense, civil, and commercial customers; and positioning, navigation, and timing products, systems, and solutions. Further, the company offers electronic warfare, avionics, surveillance and reconnaissance, command, control, communications, computers and intelligence, and undersea systems and solutions for aviation, defense, and maritime applications. Additionally, it provides managed services that support air traffic management; engineering support and sustainment for ground-based systems; and information technology and engineering managed services to government and commercial customers. The company was founded in 1895 and is headquartered in Melbourne, Florida.
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