Critical Analysis: Redwire (NYSE:RDW) and Northrop Grumman (NYSE:NOC)

Redwire (NYSE:RDW) and Northrop Grumman (NYSE:NOC) are both aerospace companies, but which is the better investment? We will compare the two companies based on the strength of their valuation, profitability, institutional ownership, risk, earnings, dividends and analyst recommendations.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Redwire and Northrop Grumman, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Redwire	1	1	7	0	2.67
Northrop Grumman	0	8	8	1	2.59

Redwire currently has a consensus price target of $18.07, suggesting a potential upside of 125.61%. Northrop Grumman has a consensus price target of $588.85, suggesting a potential upside of 2.58%. Given Redwire’s stronger consensus rating and higher probable upside, equities analysts clearly believe Redwire is more favorable than Northrop Grumman.

Profitability

This table compares Redwire and Northrop Grumman’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Redwire	-71.95%	-32.67%	-7.53%
Northrop Grumman	9.74%	25.52%	7.89%

Insider & Institutional Ownership

8.1% of Redwire shares are owned by institutional investors. Comparatively, 83.4% of Northrop Grumman shares are owned by institutional investors. 2.6% of Redwire shares are owned by insiders. Comparatively, 0.2% of Northrop Grumman shares are owned 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.

Earnings & Valuation

This table compares Redwire and Northrop Grumman”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Redwire	$304.10 million	3.79	-$114.32 million	($3.25)	-2.46
Northrop Grumman	$41.03 billion	2.00	$4.17 billion	$27.13	21.16

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

Risk & Volatility

Redwire has a beta of 2.49, indicating that its stock price is 149% more volatile than the S&P 500. Comparatively, Northrop Grumman has a beta of 0.13, indicating that its stock price is 87% less volatile than the S&P 500.

Summary

Northrop Grumman beats Redwire on 10 of the 15 factors compared between the two stocks.

About Redwire

Redwire Corporation provides critical space solutions and space infrastructure for government and commercial customers in the United States, Europe, and internationally. The company provides avionics and sensors including star trackers, sun sensors, critical for navigation, and control of spacecraft; camera systems; solar array solutions for spacecraft spanning the spectrum of size, power needs, and orbital location; and strain composite booms, coilable booms, truss structures, telescope baffles, and deployable booms to position sensors or solar arrays away from the spacecraft. It offers software suite that enables digital engineering and generation of high-fidelity, interactive modeling and simulations of individual components, entire spacecraft, and full constellations in a cloud-based environment. In addition, the company microgravity payloads, radio frequency systems, antennas, star trackers, platforms, and in-space manufacturing and biotech facilities. Redwire Corporation is headquartered in Jacksonville, Florida.

About Northrop Grumman

Northrop Grumman Corporation operates as an aerospace and defense technology company in the United States, Asia/Pacific, Europe, and internationally. The company’s Aeronautics Systems segment designs, develops, manufactures, integrates, and sustains aircraft systems. This segment also offers unmanned autonomous aircraft systems, including high-altitude long-endurance strategic ISR systems and vertical take-off and landing tactical ISR systems; and strategic long-range strike aircraft, tactical fighter and air dominance aircraft, and airborne battle management and command and control systems. Its Defense Systems segment designs, develops, integrates, and produces tactical weapons and missile defense solutions, and provides sustainment, modernization, and training services for manned and unmanned aircraft and electronics systems. It also offers integrated, all-domain command, and control battle management systems, precision strike weapons; high speed air-breathing and hypersonic systems; high-performance gun systems, ammunition, precision munitions and advanced fuzes; aircraft and mission systems logistics support, sustainment, operations and modernization; and warfighter training services. The company’s Mission Systems segment offers command, control, communications and computers, intelligence, surveillance, and reconnaissance systems; radar, electro-optical/infrared and acoustic sensors; electronic warfare systems; advanced communications and network systems; cyber solutions; intelligence processing systems; navigation; and maritime power, propulsion, and payload launch systems. Its Space Systems segment offers satellites, spacecraft systems, subsystems, sensors, and payloads; ground systems; missile defense systems and interceptors; launch vehicles and related propulsion systems; and strategic missiles. Northrop Grumman Corporation was founded in 1939 and is based in Falls Church, Virginia.