Reviewing Orbital ATK (OA) & Huntington Ingalls Industries (HII)

Orbital ATK (NYSE: OA) and Huntington Ingalls Industries (NYSE:HII) are both mid-cap industrials companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, risk, earnings, dividends, analyst recommendations, institutional ownership and valuation.

Insider and Institutional Ownership

85.7% of Orbital ATK shares are owned by institutional investors. Comparatively, 84.2% of Huntington Ingalls Industries shares are owned by institutional investors. 1.2% of Orbital ATK shares are owned by insiders. Comparatively, 2.2% of Huntington Ingalls Industries shares are owned 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.

Dividends

Orbital ATK pays an annual dividend of $1.28 per share and has a dividend yield of 1.0%. Huntington Ingalls Industries pays an annual dividend of $2.88 per share and has a dividend yield of 1.2%. Orbital ATK pays out 23.6% of its earnings in the form of a dividend. Huntington Ingalls Industries pays out 21.8% 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. Huntington Ingalls Industries has increased its dividend for 4 consecutive years. Huntington Ingalls Industries is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Orbital ATK and Huntington Ingalls Industries, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Orbital ATK 0 8 3 0 2.27
Huntington Ingalls Industries 2 3 2 0 2.00

Orbital ATK presently has a consensus price target of $118.81, suggesting a potential downside of 10.18%. Huntington Ingalls Industries has a consensus price target of $212.67, suggesting a potential downside of 9.88%. Given Huntington Ingalls Industries’ higher possible upside, analysts plainly believe Huntington Ingalls Industries is more favorable than Orbital ATK.

Valuation & Earnings

This table compares Orbital ATK and Huntington Ingalls Industries’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Orbital ATK $4.46 billion 1.71 $293.00 million $5.42 24.41
Huntington Ingalls Industries $7.07 billion 1.51 $573.00 million $13.24 17.82

Huntington Ingalls Industries has higher revenue and earnings than Orbital ATK. Huntington Ingalls Industries is trading at a lower price-to-earnings ratio than Orbital ATK, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Orbital ATK and Huntington Ingalls Industries’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Orbital ATK 6.62% 17.32% 6.08%
Huntington Ingalls Industries 8.31% 33.37% 8.90%

Risk & Volatility

Orbital ATK has a beta of 0.43, indicating that its stock price is 57% less volatile than the S&P 500. Comparatively, Huntington Ingalls Industries has a beta of 1.17, indicating that its stock price is 17% more volatile than the S&P 500.

Summary

Huntington Ingalls Industries beats Orbital ATK on 12 of the 17 factors compared between the two stocks.

Orbital ATK Company Profile

Orbital ATK, Inc. is an aerospace and defense systems company and supplier of related products to the United States Government, allied nations, prime contractors and other customers. The Company’s segments include Flight Systems Group, Defense Systems Group, Space Systems Group and Corporate. Its products include launch vehicles and related propulsion systems; satellites and associated components and services; tactical missiles, subsystems and defense electronics, and precision weapons, armament systems and ammunition. The Flight Systems Group segment consists of Launch Vehicles Division, Propulsion Systems Division and Aerospace Structures Division. The Defense Systems Group segment consists of Armament Systems Division, Defense Electronic Division, Missile Products Division and Small Caliber Systems Division. The Space Systems Group consists of Commercial Satellites Division, Government Satellites Division, Space Components Division and Technical Services Division.

Huntington Ingalls Industries Company Profile

Huntington Ingalls Industries, Inc. is a military shipbuilding company and a provider of professional services to partners in government and industry. The Company’s business consists of the design, construction, repair and maintenance of nuclear-powered ships and non-nuclear ships for the United States Navy and coastal defense surface ships for the United States Coast Guard, as well as the refueling and overhaul and inactivation of nuclear-powered ships for the United States Navy. It operates through three segments: Ingalls Shipbuilding (Ingalls), Newport News Shipbuilding (Newport News) and Technical Solutions. Its Ingalls segment includes its non-nuclear ship design, construction, repair and maintenance businesses. Its Newport News includes all of its nuclear ship design, construction, overhaul, refueling, and repair and maintenance businesses. Its Technical Solutions segment provides a range of professional services to the governmental, energy, and oil and gas markets.

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