Head to Head Comparison: Northrop Grumman (NYSE:NOC) vs. MTU Aero Engines (OTCMKTS:MTUAY)

Northrop Grumman (NYSE:NOC) and MTU Aero Engines (OTCMKTS:MTUAY) are both large-cap aerospace companies, but which is the superior investment? We will compare the two businesses based on the strength of their risk, valuation, analyst recommendations, profitability, earnings, dividends and institutional ownership.

Earnings and Valuation

This table compares Northrop Grumman and MTU Aero Engines”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Northrop Grumman	$41.03 billion	2.06	$4.17 billion	$27.13	21.71
MTU Aero Engines	$8.02 billion	2.94	$684.97 million	$8.66	25.32

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

Risk and Volatility

Northrop Grumman has a beta of 0.13, meaning that its stock price is 87% less volatile than the S&P 500. Comparatively, MTU Aero Engines has a beta of 1.34, meaning that its stock price is 34% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings for Northrop Grumman and MTU Aero Engines, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Northrop Grumman	0	8	8	1	2.59
MTU Aero Engines	0	0	1	2	3.67

Northrop Grumman currently has a consensus target price of $588.85, suggesting a potential downside of 0.04%. Given Northrop Grumman’s higher possible upside, equities research analysts clearly believe Northrop Grumman is more favorable than MTU Aero Engines.

Insider and Institutional Ownership

83.4% of Northrop Grumman shares are held by institutional investors. Comparatively, 0.0% of MTU Aero Engines shares are held by institutional investors. 0.2% of Northrop Grumman shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Northrop Grumman and MTU Aero Engines’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Northrop Grumman	9.74%	25.52%	7.89%
MTU Aero Engines	10.60%	24.07%	7.30%

Dividends

Northrop Grumman pays an annual dividend of $9.24 per share and has a dividend yield of 1.6%. MTU Aero Engines pays an annual dividend of $0.83 per share and has a dividend yield of 0.4%. Northrop Grumman pays out 34.1% of its earnings in the form of a dividend. MTU Aero Engines pays out 9.6% 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. Northrop Grumman has increased its dividend for 22 consecutive years. Northrop Grumman is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Northrop Grumman beats MTU Aero Engines on 11 of the 18 factors compared between the two stocks.

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.

About MTU Aero Engines

MTU Aero Engines AG, together with its subsidiaries, engages in the development, manufacture, marketing, and maintenance of commercial and military aircraft engines, and aero-derivative industrial gas turbines in Germany, other European countries, North America, Asia, and internationally. It operates through two segments: Original Equipment Manufacturing (OEM Business); and Maintenance, Repair, and Overhaul (MRO Business). The company offers commercial aircraft engines for wide body jets, narrow body and regional jets, business jets, and turboprops; military aircraft engines for fighter jets, helicopters, and transporters; and industrial gas turbines. It also maintains, repairs, and overhauls commercial and military engines; and manufactures and markets various spare parts. The company was formerly known as MTU Aero Engines Holding AG and changed its name to MTU Aero Engines AG in May 2013. MTU Aero Engines AG was founded in 1913 and is headquartered in Munich, Germany.