Financial Contrast: Woodward (NASDAQ:WWD) and Heico (NYSE:HEI)

Heico (NYSE:HEI) and Woodward (NASDAQ:WWD) 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, analyst recommendations, institutional ownership, dividends, risk, earnings and valuation.

Dividends

Heico pays an annual dividend of $0.24 per share and has a dividend yield of 0.1%. Woodward pays an annual dividend of $1.28 per share and has a dividend yield of 0.3%. Heico pays out 4.7% of its earnings in the form of a dividend. Woodward pays out 16.1% 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. Heico has increased its dividend for 17 consecutive years and Woodward has increased its dividend for 5 consecutive years.

Analyst Ratings

This is a summary of recent recommendations and price targets for Heico and Woodward, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Heico	0	7	10	0	2.59
Woodward	0	3	9	2	2.93

Heico presently has a consensus target price of $358.71, suggesting a potential upside of 32.03%. Woodward has a consensus target price of $379.50, suggesting a potential upside of 2.08%. Given Heico’s higher possible upside, research analysts clearly believe Heico is more favorable than Woodward.

Institutional & Insider Ownership

27.1% of Heico shares are owned by institutional investors. Comparatively, 81.2% of Woodward shares are owned by institutional investors. 4.9% of Heico shares are owned by insiders. Comparatively, 0.7% of Woodward shares are owned 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.

Profitability

This table compares Heico and Woodward’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Heico	15.38%	16.57%	8.34%
Woodward	12.89%	19.07%	10.23%

Risk & Volatility

Heico has a beta of 1.07, suggesting that its share price is 7% more volatile than the S&P 500. Comparatively, Woodward has a beta of 0.98, suggesting that its share price is 2% less volatile than the S&P 500.

Valuation and Earnings

This table compares Heico and Woodward”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Heico	$4.49 billion	8.45	$690.39 million	$5.06	53.70
Woodward	$3.57 billion	6.21	$442.11 million	$7.94	46.82

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

Summary

Heico beats Woodward on 11 of the 18 factors compared between the two stocks.

About Heico

HEICO Corporation, through its subsidiaries, designs, manufactures, and sells aerospace, defense, and electronic related products and services in the United States and internationally. Its Flight Support Group segment provides jet engine and aircraft component replacement parts; thermal insulation blankets and parts; renewable/reusable insulation systems; and specialty components. This segment also distributes hydraulic, pneumatic, structural, interconnect, mechanical, and electro-mechanical components for the commercial, regional, and general aviation markets; and offers repair and overhaul services for jet engine and aircraft component parts, avionics, instruments, composites, and flight surfaces of commercial aircraft, as well as for avionics and navigation systems, and other instruments utilized on military aircraft. The company's Electronic Technologies Group segment provides electro-optical infrared simulation and test equipment; electro-optical laser products; electro-optical, microwave, and other power equipment; electromagnetic and radio frequency (RF) interference shielding and suppression filters; power conversion and interface; interconnection devices; and underwater locator beacons and emergency locator transmission beacons. This segment also offers traveling wave tube amplifiers and microwave power modules; memory products and specialty semiconductors; harsh environment connectivity products and custom molded cable assemblies; RF and microwave products; communications and electronic intercept receivers and tuners; self-sealing auxiliary fuel systems; active antenna systems and airborne antennas; nuclear radiation detectors; silicone products; power amplifiers; ceramic-to-metal feedthroughs and connectors; technical surveillance countermeasures equipment; RF receivers and sources; embedded computing solutions; test sockets and adapters; and radiation assurance services. The company was incorporated in 1957 and is headquartered in Hollywood, Florida.

About Woodward

Woodward, Inc. designs, manufactures, and services control solutions for the aerospace and industrial markets worldwide. The company operates in two segments, Aerospace and Industrial. The Aerospace segment provides fuel pumps, metering units, actuators, air valves, specialty valves, fuel nozzles, and thrust reverser actuation systems for turbine engines and nacelles, and flight deck controls, actuators, servocontrols, motors, and sensors for aircraft. These products are used on commercial and private aircraft and rotorcraft, as well as on military fixed-wing aircraft and rotorcraft, guided weapons, and other defense systems. It also provides aftermarket maintenance, repair and overhaul, and other services to commercial airlines, repair facilities, military depots, third party repair shops, and other end users. This segment sells its products to original equipment manufacturers (OEMs), tier-one suppliers, and contractors, as well as through aftermarket sales of components, such as provisioning spares and replacements. The Industrial segment offers actuators, valves, pumps, fuel injection systems, solenoids, ignition systems, speed controls, electronics and software, and sensors. These products are used on industrial gas turbines, steam turbines, compressors, and reciprocating engines. This segment sells its aftermarket products, and other related services to OEMs through an independent network of distributors, as well as directly to end users. The company was founded in 1870 and is headquartered in Fort Collins, Colorado.