Huntington Ingalls Industries (NYSE: HII) and Lockheed Martin (NYSE:LMT) are both large-cap aerospace & defense – nec companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, dividends, earnings, profitability and institutional ownership.

Dividends

Huntington Ingalls Industries pays an annual dividend of $2.40 per share and has a dividend yield of 1.0%. Lockheed Martin pays an annual dividend of $7.28 per share and has a dividend yield of 2.4%. Huntington Ingalls Industries pays out 18.1% of its earnings in the form of a dividend. Lockheed Martin pays out 59.0% 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 raised its dividend for 4 consecutive years and Lockheed Martin has raised its dividend for 14 consecutive years. Lockheed Martin is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current ratings and target prices for Huntington Ingalls Industries and Lockheed Martin, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Huntington Ingalls Industries 2 3 2 0 2.00
Lockheed Martin 0 5 9 0 2.64

Huntington Ingalls Industries currently has a consensus price target of $212.67, indicating a potential downside of 8.68%. Lockheed Martin has a consensus price target of $319.62, indicating a potential upside of 3.20%. Given Lockheed Martin’s stronger consensus rating and higher probable upside, analysts plainly believe Lockheed Martin is more favorable than Huntington Ingalls Industries.

Volatility & Risk

Huntington Ingalls Industries has a beta of 1.19, suggesting that its stock price is 19% more volatile than the S&P 500. Comparatively, Lockheed Martin has a beta of 0.58, suggesting that its stock price is 42% less volatile than the S&P 500.

Profitability

This table compares Huntington Ingalls Industries and Lockheed Martin’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Huntington Ingalls Industries 8.31% 33.37% 8.90%
Lockheed Martin 7.72% 223.99% 7.71%

Insider and Institutional Ownership

84.7% of Huntington Ingalls Industries shares are owned by institutional investors. Comparatively, 79.3% of Lockheed Martin shares are owned by institutional investors. 2.2% of Huntington Ingalls Industries shares are owned by insiders. Comparatively, 0.4% of Lockheed Martin shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Huntington Ingalls Industries and Lockheed Martin’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Huntington Ingalls Industries $7.07 billion 1.49 $573.00 million $13.28 17.54
Lockheed Martin $47.25 billion 1.88 $5.30 billion $12.33 25.12

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

Summary

Lockheed Martin beats Huntington Ingalls Industries on 10 of the 17 factors compared between the two stocks.

About Huntington Ingalls Industries

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.

About Lockheed Martin

Lockheed Martin Corporation is a security and aerospace company. The Company operates through four segments. Aeronautics segment is engaged in the research, design, development, manufacture, integration, sustainment, support and upgrade of military aircraft, including combat and air mobility aircraft, unmanned air vehicles and related technologies. Missiles and Fire Control segment provides air and missile defense systems; fire control systems; manned and unmanned ground vehicles, and energy management solutions. Rotary and Mission Systems segment provides design, manufacture, service and support for a range of military and civil helicopters; mission systems and sensors for rotary and fixed-wing aircraft; simulation and training services, and unmanned systems and technologies, among others. Space Systems segment is engaged in the research and development, design, engineering and production of satellites, strategic and defensive missile systems and space transportation systems.

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