Financial Comparison: General Dynamics (NYSE:GD) & Heico (NYSE:HEI.A)

General Dynamics (NYSE:GD) and Heico (NYSE:HEI.A) are both large-cap industrials companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, valuation, earnings, analyst recommendations, profitability, risk and dividends.

Risk & Volatility

General Dynamics has a beta of 0.32, indicating that its stock price is 68% less volatile than the S&P 500. Comparatively, Heico has a beta of 1.08, indicating that its stock price is 8% more volatile than the S&P 500.

Dividends

General Dynamics pays an annual dividend of $6.36 per share and has a dividend yield of 1.8%. Heico pays an annual dividend of $0.26 per share and has a dividend yield of 0.1%. General Dynamics pays out 38.8% of its earnings in the form of a dividend. Heico pays out 4.3% 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. General Dynamics has raised its dividend for 34 consecutive years. General Dynamics is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current ratings and recommmendations for General Dynamics and Heico, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
General Dynamics	1	5	12	1	2.68
Heico	0	1	0	1	3.00

General Dynamics presently has a consensus target price of $411.58, indicating a potential upside of 16.62%. Given General Dynamics’ higher probable upside, equities analysts clearly believe General Dynamics is more favorable than Heico.

Insider and Institutional Ownership

86.1% of General Dynamics shares are owned by institutional investors. Comparatively, 59.0% of Heico shares are owned by institutional investors. 1.4% of General Dynamics shares are owned by insiders. Comparatively, 9.8% of Heico shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares General Dynamics and Heico’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
General Dynamics	8.18%	17.43%	7.67%
Heico	16.38%	18.00%	9.15%

Earnings and Valuation

This table compares General Dynamics and Heico”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
General Dynamics	$52.55 billion	1.82	$4.21 billion	$16.39	21.53
Heico	$4.49 billion	7.32	$690.39 million	$6.01	39.11

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

Summary

Heico beats General Dynamics on 9 of the 17 factors compared between the two stocks.

About General Dynamics

General Dynamics Corporation operates as an aerospace and defense company worldwide. It operates through four segments: Aerospace, Marine Systems, Combat Systems, and Technologies. The Aerospace segment produces and sells business jets; and offers aircraft maintenance and repair, management, aircraft-on-ground support and completion, charter, staffing, and fixed-base operator services. The Marine Systems segment designs and builds nuclear-powered submarines, surface combatants, and auxiliary ships for the United States Navy and Jones Act ships for commercial customers, as well as builds crude oil and product tankers, and container and cargo ships; provides maintenance, modernization, and lifecycle support services for navy ships; offers and program management, planning, engineering, and design support services for submarine construction programs. The Combat Systems segment manufactures land combat solutions, such as wheeled and tracked combat vehicles, Stryker wheeled combat vehicles, piranha vehicles, weapons systems, munitions, mobile bridge systems with payloads, tactical vehicles, main battle tanks, armored vehicles, and armaments; and offers modernization programs, engineering, support, and sustainment services. The Technologies segment provides information technology solutions and mission support services; mobile communication, computers, and command-and-control mission systems; intelligence, surveillance, and reconnaissance solutions to military, intelligence, and federal civilian customers; cloud computing, artificial intelligence; machine learning; big data analytics; development, security, and operations; and unmanned undersea vehicle manufacturing and assembly services. The company was founded in 1899 and is headquartered in Reston, Virginia.

About Heico

HEICO Corporation, through its subsidiaries, designs, manufactures, and sells aerospace, defense, and electronic related products and services in the United States and internationally. The company's Flight Support Group segment provides jet engine and aircraft component replacement parts; thermal insulation blankets and parts; renewable/reusable insulation systems; and specialty components. This segment also distributes hydraulic, pneumatic, structural, interconnect, mechanical, and electro-mechanical components for the commercial, regional, and general aviation markets; and offers repair and overhaul services for jet engine and aircraft component parts, avionics, instruments, composites, and flight surfaces of commercial aircraft, as well as for avionics and navigation systems, subcomponents, and other instruments utilized on military aircraft. Its Electronic Technologies Group segment provides electro-optical infrared simulation and test equipment; electro-optical laser products; electro-optical, microwave, and other power equipment; electromagnetic and radio interference shielding and suppression filters; high-speed interface products; high voltage interconnection devices; high voltage advanced power electronics; power conversion products; and underwater locator beacons and emergency locator transmission beacons. This segment also offers traveling wave tube amplifiers and microwave power modules; three-dimensional microelectronic and stacked memory products; harsh environment connectivity products and custom molded cable assemblies; radio frequency and microwave amplifiers, transmitters, and receivers; communications and electronic intercept receivers and tuners; self-sealing auxiliary fuel systems; active antenna systems; and nuclear radiation detectors. The company serves customers primarily in the aviation, defense, space, medical, telecommunications, and electronics industries. HEICO Corporation was founded in 1957 and is headquartered in Hollywood, Florida.