StandardAero (NYSE:SARO) & Northrop Grumman (NYSE:NOC) Critical Contrast

StandardAero (NYSE:SARO) 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 earnings, profitability, analyst recommendations, valuation, institutional ownership, risk and dividends.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for StandardAero and Northrop Grumman, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
StandardAero	2	4	2	0	2.00
Northrop Grumman	0	6	11	1	2.72

StandardAero currently has a consensus target price of $32.71, indicating a potential upside of 22.05%. Northrop Grumman has a consensus target price of $642.73, indicating a potential upside of 12.94%. Given StandardAero’s higher probable upside, analysts plainly believe StandardAero is more favorable than Northrop Grumman.

Valuation and Earnings

This table compares StandardAero and Northrop Grumman”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
StandardAero	$5.24 billion	1.71	$10.97 million	$0.41	65.38
Northrop Grumman	$40.93 billion	1.98	$4.17 billion	$27.80	20.47

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
StandardAero	2.37%	8.87%	2.98%
Northrop Grumman	9.82%	25.49%	8.01%

Institutional & Insider Ownership

83.4% of Northrop Grumman shares are held by institutional investors. 1.9% of StandardAero shares are held by insiders. Comparatively, 0.2% of Northrop Grumman shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Northrop Grumman beats StandardAero on 11 of the 14 factors compared between the two stocks.

About StandardAero

StandardAero, Inc. provides aerospace engine aftermarket services for fixed and rotary wing aircraft in the United States, Canada, the United Kingdom, Rest of Europe, Asia, and internationally. It operates in two segments, Engine Services and Component Repair Services. The Engine Services segment provides a suite of aftermarket services, including maintenance, repair and overhaul, on-wing and field service support, asset management, and engineering and related solutions to customers in the commercial aerospace, military and helicopter, and business aviation end markets. The Component Repair Services segment offers engine component and accessory repairs to the commercial aerospace, military and helicopter, land and marine, and oil and gas end markets. The company was founded in 1911 and is headquartered in Scottsdale, Arizona.

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.