Elbit Systems (NASDAQ: ESLT) and Cubic (NYSE:CUB) are both aerospace companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, profitability, valuation, dividends, analyst recommendations and risk.

Profitability

This table compares Elbit Systems and Cubic’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Elbit Systems 7.13% 16.32% 5.88%
Cubic -0.75% -1.66% -0.80%

Earnings & Valuation

This table compares Elbit Systems and Cubic’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Elbit Systems $3.26 billion 1.76 $236.90 million $5.54 24.19
Cubic $1.49 billion 1.09 -$11.20 million ($0.41) -145.73

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

Insider & Institutional Ownership

11.1% of Elbit Systems shares are owned by institutional investors. Comparatively, 89.4% of Cubic shares are owned by institutional investors. 0.8% of Elbit Systems shares are owned by insiders. Comparatively, 7.7% of Cubic shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Risk and Volatility

Elbit Systems has a beta of 0.6, indicating that its stock price is 40% less volatile than the S&P 500. Comparatively, Cubic has a beta of 1.1, indicating that its stock price is 10% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations for Elbit Systems and Cubic, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Elbit Systems 0 2 0 0 2.00
Cubic 0 1 4 0 2.80

Elbit Systems presently has a consensus target price of $110.00, suggesting a potential downside of 17.91%. Cubic has a consensus target price of $60.60, suggesting a potential upside of 1.42%. Given Cubic’s stronger consensus rating and higher probable upside, analysts clearly believe Cubic is more favorable than Elbit Systems.

Dividends

Elbit Systems pays an annual dividend of $1.76 per share and has a dividend yield of 1.3%. Cubic pays an annual dividend of $0.27 per share and has a dividend yield of 0.5%. Elbit Systems pays out 31.8% of its earnings in the form of a dividend. Cubic pays out -65.9% 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.

Summary

Elbit Systems beats Cubic on 9 of the 16 factors compared between the two stocks.

About Elbit Systems

Elbit Systems Ltd. is an international technology company engaged in a range of programs across the world. The Company develops and supplies a portfolio of airborne, land and naval systems and products for defense, homeland security and commercial aviation applications. Its systems and products are installed on new platforms, and it also performs platform modernization programs. In addition, it provides a range of support services. The Company’s activities include military aircraft and helicopter systems; helmet mounted systems; commercial aviation systems and aerostructures; unmanned aircraft and unmanned surface vessels; land vehicle systems; command, control, communications, computer and intelligence (C4I) systems; intelligence and cyber systems; electro-optic and countermeasures systems; electronic warfare and signal intelligence systems, and various commercial activities. It operates primarily in the defense and homeland security arenas.

About Cubic

Cubic Corporation (Cubic) designs, integrates and operates systems, products and services that provide situational awareness for its customers in the transportation and defense industries. The Company operates in three business segments across the global transportation and defense markets, which include Cubic Transportation Systems (CTS), Cubic Global Defense (CGD) and Cubic Global Defense Services (CGD Services). The Company’s CTS segment is a systems integrator of payment and information technology and services for travel solutions. The Company’s CGD Systems is focused on two primary lines of business: training systems and secure communications (SC) products. The Company’s CGD Services segment is a provider of training, operations, intelligence, maintenance, technical and other support services to the United States government and its agencies and allied nations. It also provides cross-domain hardware solutions to address multi-level security challenges across common networks.

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