Critical Survey: Saab (OTCMKTS:SAABY) versus Transdigm Group (NYSE:TDG)

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

Risk & Volatility

Transdigm Group has a beta of 0.94, suggesting that its stock price is 6% less volatile than the S&P 500. Comparatively, Saab has a beta of -0.19, suggesting that its stock price is 119% less volatile than the S&P 500.

Insider & Institutional Ownership

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

Valuation & Earnings

This table compares Transdigm Group and Saab”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	$8.83 billion	9.25	$2.07 billion	$32.08	45.21
Saab	$6.03 billion	6.81	$394.58 million	$0.62	61.90

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Transdigm Group	21.69%	-31.91%	9.53%
Saab	7.17%	13.23%	4.94%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Transdigm Group and Saab, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Transdigm Group	0	4	13	1	2.83
Saab	2	1	0	1	2.00

Transdigm Group presently has a consensus target price of $1,597.00, indicating a potential upside of 10.11%. Given Transdigm Group’s stronger consensus rating and higher probable upside, research analysts plainly believe Transdigm Group is more favorable than Saab.

Summary

Transdigm Group beats Saab on 12 of the 14 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 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.