Financial Review: Saab (OTCMKTS:SAABY) & VSE (NASDAQ:VSEC)

VSE (NASDAQ:VSEC) and Saab (OTCMKTS:SAABY) are both industrials companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, earnings, institutional ownership, analyst recommendations, valuation, profitability and risk.

Valuation & Earnings

This table compares VSE and Saab”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
VSE	$1.11 billion	5.16	$11.70 million	$3.12	65.52
Saab	$8.42 billion	3.92	$645.29 million	$0.70	43.98

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

Volatility and Risk

VSE has a beta of 1.24, suggesting that its share price is 24% more volatile than the S&P 500. Comparatively, Saab has a beta of -0.12, suggesting that its share price is 112% less volatile than the S&P 500.

Dividends

VSE pays an annual dividend of $0.40 per share and has a dividend yield of 0.2%. Saab pays an annual dividend of $0.06 per share and has a dividend yield of 0.2%. VSE pays out 12.8% of its earnings in the form of a dividend. Saab pays out 8.6% 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.

Profitability

This table compares VSE and Saab’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
VSE	6.17%	6.71%	4.76%
Saab	8.05%	15.87%	5.80%

Analyst Ratings

This is a breakdown of recent ratings and price targets for VSE and Saab, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
VSE	0	3	8	1	2.83
Saab	0	3	0	2	2.80

VSE currently has a consensus price target of $252.22, indicating a potential upside of 23.38%. Given VSE’s stronger consensus rating and higher possible upside, equities research analysts clearly believe VSE is more favorable than Saab.

Institutional & Insider Ownership

91.5% of VSE shares are held by institutional investors. 1.8% of VSE shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

VSE beats Saab on 10 of the 17 factors compared between the two stocks.

About VSE

VSE Corporation operates as a diversified aftermarket products and services company in the United States. The company operates through two segments, Aviation and Fleet. The Aviation segment provides aftermarket parts supply and distribution; maintenance, repair, and overhaul services for components and engine accessories supporting commercial, business, and general aviation operators. This segment serves commercial airlines, regional airlines, cargo transporters, MRO integrators and providers, aviation manufacturers, corporate and private aircraft owners, and fixed-base operators. The Fleet segment offers parts supply, inventory management, e-commerce fulfillment, logistics, supply chain support, and other services to support the commercial aftermarket medium- and heavy-duty truck market. This segment also provides sale of vehicle parts and supply chain services to support client truck fleets, as well as sustainment solutions and managed inventory services to government and commercial truck fleets. VSE Corporation was incorporated in 1959 and is headquartered in Alexandria, Virginia.

About Saab

Saab AB (publ) provides products, services, and solutions for military defense, aviation, and civil security markets worldwide. The company operates through Aeronautics, Dynamics, Surveillance, Kockums, and Combitech segments. The company develops military aviation technology, as well as conducts studies on manned and unmanned aircraft. It also provides ground combat weapons, missile systems, torpedoes, unmanned underwater vehicles, training and simulation systems, and signature management systems for armed forces; and niche products for the civil and defense market, such as underwater vehicles for the offshore industry. In addition, the company offers solutions for safety and security, surveillance and decision support, and threat detection, location, and protection, including airborne, ground-based and naval radar, electronic warfare, and combat systems, as well as C4I solutions. Additionally, it provides submarines with the Stirling system for air independent propulsion, surface combatants, mine hunting systems, and autonomous vessels; and systems development, systems integration, information security, systems security, communications, mechanics, and technical product information and logistics. Saab AB (publ) was incorporated in 1937 and is headquartered in Stockholm, Sweden.