Transdigm Group (NYSE:TDG) and Bae Systems (OTCMKTS:BAESY) Critical Review

Transdigm Group (NYSE:TDG) and Bae Systems (OTCMKTS:BAESY) are both large-cap aerospace companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, institutional ownership, valuation, profitability and risk.

Volatility & Risk

Transdigm Group has a beta of 1.07, indicating that its share price is 7% more volatile than the S&P 500. Comparatively, Bae Systems has a beta of 0.3, indicating that its share price is 70% less volatile than the S&P 500.

Valuation & Earnings

This table compares Transdigm Group and Bae Systems”s gross 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	10.03	$1.71 billion	$30.13	46.92
Bae Systems	$28.48 billion	2.55	$2.50 billion	N/A	N/A

Bae Systems has higher revenue and earnings than Transdigm Group.

Analyst Ratings

This is a summary of recent recommendations and price targets for Transdigm Group and Bae Systems, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Transdigm Group	0	4	9	0	2.69
Bae Systems	1	1	3	0	2.40

Transdigm Group presently has a consensus price target of $1,624.69, indicating a potential upside of 14.92%. Given Transdigm Group’s stronger consensus rating and higher possible upside, analysts plainly believe Transdigm Group is more favorable than Bae Systems.

Profitability

This table compares Transdigm Group and Bae Systems’ 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%
Bae Systems	N/A	N/A	N/A

Institutional & Insider Ownership

95.8% of Transdigm Group shares are owned by institutional investors. Comparatively, 0.2% of Bae Systems shares are owned by institutional investors. 4.1% of Transdigm Group 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.

Summary

Transdigm Group beats Bae Systems on 9 of the 12 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 Bae Systems

BAE Systems plc provides defense, aerospace, and security solutions worldwide. The company operates through five segments: Electronic Systems, Platforms & Services, Air, Maritime, and Cyber & Intelligence. The Electronic Systems segment offers electronic warfare systems, navigation systems, electro-optical sensors, military and commercial digital engine and flight controls, precision guidance and seeker solutions, military communication systems and data links, persistent surveillance capabilities, space electronics, and electric drive propulsion systems. The Cyber & Intelligence segment provides solutions to modernize, maintain, and test cyber-harden aircraft, radars, missile systems, and mission applications that detect and deter threats to national security; systems engineering, integration, and sustainment services for critical weapons systems, C5ISR, and cyber security; and solutions and services to intelligence and federal/civilian agencies. It also offers data intelligence solutions to protect nations, businesses, and citizens. The Platforms & Services segment manufactures, and upgrades combat vehicles, weapons, and munitions, as well as provides naval ship repair services and the management of government-owned ammunition plants. The Air segment develops future combat air systems and falconworks. The Maritime segment provides maritime and land activities, including submarine, ship build, and support programmes. BAE Systems plc was founded in 1970 and is headquartered in Camberley, the United Kingdom.