United Technologies (NYSE: UTX) and Northrop Grumman (NYSE:NOC) are both large-cap industrials companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, profitability, valuation, risk, institutional ownership and earnings.
United Technologies pays an annual dividend of $2.80 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 1.2%. United Technologies pays out 49.1% of its earnings in the form of a dividend. Northrop Grumman pays out 34.9% 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 raised its dividend for 10 consecutive years and Northrop Grumman has raised its dividend for 6 consecutive years. United Technologies is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
80.0% of United Technologies shares are held by institutional investors. Comparatively, 81.2% of Northrop Grumman shares are held by institutional investors. 0.2% of United Technologies shares are held by insiders. Comparatively, 0.7% of Northrop Grumman shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
This is a summary of recent recommendations and price targets for United Technologies and Northrop Grumman, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
United Technologies presently has a consensus price target of $136.40, indicating a potential upside of 5.08%. Northrop Grumman has a consensus price target of $320.16, indicating a potential downside of 2.24%. Given United Technologies’ higher probable upside, analysts clearly believe United Technologies is more favorable than Northrop Grumman.
Risk & Volatility
United Technologies has a beta of 1.08, suggesting that its stock price is 8% more volatile than the S&P 500. Comparatively, Northrop Grumman has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500.
This table compares United Technologies and Northrop Grumman’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Valuation and Earnings
This table compares United Technologies and Northrop Grumman’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||1.73||$4.55 billion||$5.70||22.77|
|Northrop Grumman||$25.80 billion||2.21||$2.02 billion||$11.47||28.55|
United Technologies has higher revenue and earnings than Northrop Grumman. United Technologies is trading at a lower price-to-earnings ratio than Northrop Grumman, indicating that it is currently the more affordable of the two stocks.
Northrop Grumman beats United Technologies on 11 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.
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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