Comparing Transdigm Group (NYSE:TDG) & Leonardo DRS (NASDAQ:DRS)

Transdigm Group (NYSE:TDG) and Leonardo DRS (NASDAQ:DRS) are both large-cap aerospace companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, risk, institutional ownership, valuation, dividends, earnings and analyst recommendations.

Risk & Volatility

Transdigm Group has a beta of 1.07, suggesting that its share price is 7% more volatile than the S&P 500. Comparatively, Leonardo DRS has a beta of 0.65, suggesting that its share price is 35% less volatile than the S&P 500.

Institutional & Insider Ownership

95.8% of Transdigm Group shares are held by institutional investors. Comparatively, 18.8% of Leonardo DRS shares are held by institutional investors. 4.1% of Transdigm Group shares are held by insiders. Comparatively, 0.3% of Leonardo DRS shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Transdigm Group and Leonardo DRS, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Transdigm Group	0	4	10	0	2.71
Leonardo DRS	0	2	5	0	2.71

Transdigm Group presently has a consensus price target of $1,624.00, indicating a potential upside of 13.64%. Leonardo DRS has a consensus price target of $46.2857, indicating a potential upside of 12.21%. Given Transdigm Group’s higher probable upside, equities research analysts plainly believe Transdigm Group is more favorable than Leonardo DRS.

Valuation and Earnings

This table compares Transdigm Group and Leonardo DRS”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Transdigm Group	$7.94 billion	10.11	$1.71 billion	$30.13	47.43
Leonardo DRS	$3.23 billion	3.39	$213.00 million	$0.93	44.35

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

Profitability

This table compares Transdigm Group and Leonardo DRS’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Transdigm Group	20.98%	-35.27%	8.92%
Leonardo DRS	7.31%	11.02%	6.93%

Summary

Transdigm Group beats Leonardo DRS on 12 of the 13 factors compared between the two stocks.

About Transdigm Group

TransDigm Group Incorporated designs, produces, and supplies aircraft components in the United States and internationally. The Power & Control segment offers mechanical/electro-mechanical actuators and controls, ignition systems and engine technology, specialized pumps and valves, power conditioning devices, specialized AC/DC electric motors and generators, batteries and chargers, databus and power controls, sensor products, switches and relay panels, hoists, winches and lifting devices, and cargo loading and handling systems. This segment serves engine and power system and subsystem suppliers, airlines, third party maintenance suppliers, military buying agencies, and repair depots. The Airframe segment provides engineered latching and locking devices, engineered rods, engineered connectors and elastomer sealing solutions, cockpit security components and systems, cockpit displays, engineered audio, radio and antenna systems, lavatory components, seat belts and safety restraints, engineered and customized interior surfaces and related components, thermal protection and insulation products, lighting and control technology, and parachutes. This segment serves airframe manufacturers, cabin system and subsystem suppliers, airlines, third party maintenance suppliers, military buying agencies, and repair depots. The Non-aviation segment offers seat belts and safety restraints for ground transportation applications; electro-mechanical actuators for space applications; hydraulic/electromechanical actuators and fuel valves for land-based gas turbines; refueling systems for heavy equipment used in mining, construction, and other industries; and turbine controls for the energy and oil and gas markets. This segment serves off-road vehicle and subsystem suppliers, child restraint system suppliers, and satellite and space system suppliers; and manufacturers of heavy equipment. TransDigm Group Incorporated was founded in 1993 and is based in Cleveland, Ohio.

About Leonardo DRS

Leonardo DRS, Inc., together with its subsidiaries, provides defense electronic products and systems, and military support services. It operates through Advanced Sensing and Computing (ASC) segment, and Integrated Mission Systems (IMS) segments. The ASC segment designs, develops, and manufacture sensing and network computing technology that enables real-time situational awareness required for enhanced operational decision making and execution; and offers sensing capabilities span applications, such as missions requiring advanced detection, precision targeting and surveillance sensing, long range electro-optic/infrared, signals intelligence, and other intelligence systems including electronic warfare, ground vehicle sensing, active electronically scanned array tactical radars, dismounted soldier, and space sensing. This segment also provides network computing, which are utilized across a range of mission applications including platform computing on ground and shipboard for advanced battle management, combat systems, radar, command and control, tactical networks, tactical computing, and communications. The IMS segment designs, develops, manufacture, and integrates power conversion, control, and distribution systems, ship propulsion systems, motors and variable frequency drives, force protection systems, transportation, and logistics systems for the U.S. and allied defense customers. This segment also offers electrical propulsion systems, which includes power conversion, control, distribution, and propulsion systems, as well as power dense permanent magnet motors, energy storage systems and associated efficient, rugged, and compact power conversion, electrical actuation systems, as well as cooling technologies; and motor controllers, instrumentation and control equipment, electrical actuation systems, and thermal management systems. The company was incorporated in 1968 and is based in Arlington, Virginia. Leonardo DRS, Inc. operates as a subsidiary of Leonardo S.p.A.