Analyzing Rocket Lab (NASDAQ:RKLB) and AAR (NYSE:AIR)

AAR (NYSE:AIR) and Rocket Lab (NASDAQ:RKLB) are both aerospace companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, earnings, institutional ownership, analyst recommendations, profitability, dividends and risk.

Risk and Volatility

AAR has a beta of 1.24, meaning that its stock price is 24% more volatile than the S&P 500. Comparatively, Rocket Lab has a beta of 2.16, meaning that its stock price is 116% more volatile than the S&P 500.

Valuation & Earnings

This table compares AAR and Rocket Lab”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AAR	$2.78 billion	1.51	$12.50 million	$2.55	41.49
Rocket Lab	$436.21 million	98.05	-$190.18 million	($0.38)	-210.71

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

Analyst Ratings

This is a summary of current recommendations and price targets for AAR and Rocket Lab, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AAR	0	2	4	1	2.86
Rocket Lab	1	5	7	2	2.67

AAR currently has a consensus target price of $110.80, suggesting a potential upside of 4.74%. Rocket Lab has a consensus target price of $72.92, suggesting a potential downside of 8.93%. Given AAR’s stronger consensus rating and higher possible upside, equities analysts clearly believe AAR is more favorable than Rocket Lab.

Profitability

This table compares AAR and Rocket Lab’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AAR	3.17%	12.40%	5.43%
Rocket Lab	-35.64%	-27.26%	-12.21%

Institutional and Insider Ownership

90.7% of AAR shares are held by institutional investors. Comparatively, 71.8% of Rocket Lab shares are held by institutional investors. 3.6% of AAR shares are held by company insiders. Comparatively, 11.9% of Rocket Lab shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

AAR beats Rocket Lab on 10 of the 15 factors compared between the two stocks.

About AAR

AAR Corp. provides products and services to commercial aviation, government, and defense markets worldwide. The Parts Supply segment leases and sells aircraft components and replacement parts. The Repair & Engineering segment provides airframe maintenance services, such as airframe inspection, painting, line maintenance, airframe modification, structural repair, avionics service and installation, exterior and interior refurbishment, and engineering and support services; component repair services comprising maintenance, repair, and overhaul (MRO) services, engine and airframe accessories, and interior refurbishment; and landing gear overhaul services, including repair services on wheels and brakes. This segment also develops specific aircraft components and parts; and designs proprietary designated engineering representative repairs. The Integrated Solutions segment engages in the fleet management and operation of customer-owned aircraft; provision of supply chain logistics services, such as material planning, sourcing, logistics, information and program management, and parts and component repair and overhaul services; and flight hour component inventory and repair services. In addition, the segment provides integrated software solutions comprising Trax, a cloud-based electronic enterprise resource platform, as well as a suite of paperless mobility apps for automating MRO workflows. The Expeditionary Services segment designs, manufactures, and repairs transportation pallets; and containers and shelters for military and humanitarian tactical deployment activities, including armories, supply and parts storage, refrigeration systems, tactical operation centers, briefing rooms, laundry and kitchen facilities, water treatment, and sleeping quarters, as well as engages in provision of engineering, design, and system integration services for specialized command and control systems. AAR Corp. was founded in 1951 and is headquartered in Wood Dale, Illinois.

About Rocket Lab

Rocket Lab USA, Inc., a space company, provides launch services and space systems solutions for the space and defense industries. The company provides launch services, spacecraft design services, spacecraft components, spacecraft manufacturing, and other spacecraft and on-orbit management solutions; and constellation management services, as well as designs and manufactures small and medium-class rockets. It also designs, manufactures, and sells Electron, a reusable orbital-class small rocket; and the Photon satellite platforms, as well as developing the Neutron 8-ton payload class launch vehicle; conducts remote launch activities; and designs and manufactures a range of components and subsystems for the Photon family of spacecraft and broader merchant spacecraft components. The company serves commercial, aerospace prime contractors, and government customers. Rocket Lab USA, Inc. was founded in 2006 and is headquartered in Long Beach, California.