Head-To-Head Survey: Saab (OTCMKTS:SAABY) and Woodward (NASDAQ:WWD)

Saab (OTCMKTS:SAABY) and Woodward (NASDAQ:WWD) are both large-cap aerospace companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, valuation, profitability, dividends, earnings, institutional ownership and risk.

Risk and Volatility

Saab has a beta of -0.07, suggesting that its stock price is 107% less volatile than the S&P 500. Comparatively, Woodward has a beta of 0.98, suggesting that its stock price is 2% less volatile than the S&P 500.

Dividends

Saab pays an annual dividend of $0.06 per share and has a dividend yield of 0.2%. Woodward pays an annual dividend of $1.28 per share and has a dividend yield of 0.3%. Saab pays out 8.1% 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. Woodward has increased its dividend for 5 consecutive years. Woodward is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Saab and Woodward”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Saab	$8.42 billion	3.88	$645.29 million	$0.74	41.24
Woodward	$3.79 billion	5.76	$442.11 million	$7.94	46.16

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

Analyst Recommendations

This is a breakdown of current ratings for Saab and Woodward, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Saab	2	1	0	0	1.33
Woodward	0	3	10	2	2.93

Woodward has a consensus target price of $385.91, indicating a potential upside of 5.30%. Given Woodward’s stronger consensus rating and higher probable upside, analysts plainly believe Woodward is more favorable than Saab.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Saab	7.99%	15.73%	5.82%
Woodward	12.89%	19.07%	10.23%

Institutional & Insider Ownership

81.2% of Woodward shares are owned by institutional investors. 0.7% of Woodward shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Woodward beats Saab on 15 of the 18 factors compared between the two stocks.

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.

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.