Critical Contrast: StandardAero (NYSE:SARO) versus General Dynamics (NYSE:GD)

StandardAero (NYSE:SARO) and General Dynamics (NYSE:GD) are both large-cap aerospace companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, valuation, profitability, institutional ownership, risk, dividends and earnings.

Institutional and Insider Ownership

86.1% of General Dynamics shares are held by institutional investors. 1.5% of General Dynamics shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations for StandardAero and General Dynamics, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
StandardAero	1	5	4	0	2.30
General Dynamics	1	7	13	1	2.64

StandardAero currently has a consensus target price of $34.00, suggesting a potential upside of 11.35%. General Dynamics has a consensus target price of $375.47, suggesting a potential upside of 7.95%. Given StandardAero’s higher probable upside, analysts clearly believe StandardAero is more favorable than General Dynamics.

Volatility & Risk

StandardAero has a beta of 1.04, suggesting that its stock price is 4% more volatile than the S&P 500. Comparatively, General Dynamics has a beta of 0.41, suggesting that its stock price is 59% less volatile than the S&P 500.

Valuation and Earnings

This table compares StandardAero and General Dynamics”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
StandardAero	$5.24 billion	1.95	$10.97 million	$0.55	55.52
General Dynamics	$52.55 billion	1.79	$4.21 billion	$15.45	22.51

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

Profitability

This table compares StandardAero and General Dynamics’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
StandardAero	3.15%	9.63%	3.69%
General Dynamics	8.01%	17.57%	7.38%

Summary

General Dynamics beats StandardAero on 11 of the 15 factors compared between the two stocks.

About StandardAero

StandardAero, Inc. provides aerospace engine aftermarket services for fixed and rotary wing aircraft in the United States, Canada, the United Kingdom, Rest of Europe, Asia, and internationally. It operates in two segments, Engine Services and Component Repair Services. The Engine Services segment provides a suite of aftermarket services, including maintenance, repair and overhaul, on-wing and field service support, asset management, and engineering and related solutions to customers in the commercial aerospace, military and helicopter, and business aviation end markets. The Component Repair Services segment offers engine component and accessory repairs to the commercial aerospace, military and helicopter, land and marine, and oil and gas end markets. The company was founded in 1911 and is headquartered in Scottsdale, Arizona.

About General Dynamics

General Dynamics Corporation operates as an aerospace and defense company worldwide. It operates through four segments: Aerospace, Marine Systems, Combat Systems, and Technologies. The Aerospace segment produces and sells business jets; and offers aircraft maintenance and repair, management, aircraft-on-ground support and completion, charter, staffing, and fixed-base operator services. The Marine Systems segment designs and builds nuclear-powered submarines, surface combatants, and auxiliary ships for the United States Navy and Jones Act ships for commercial customers, as well as builds crude oil and product tankers, and container and cargo ships; provides maintenance, modernization, and lifecycle support services for navy ships; offers and program management, planning, engineering, and design support services for submarine construction programs. The Combat Systems segment manufactures land combat solutions, such as wheeled and tracked combat vehicles, Stryker wheeled combat vehicles, piranha vehicles, weapons systems, munitions, mobile bridge systems with payloads, tactical vehicles, main battle tanks, armored vehicles, and armaments; and offers modernization programs, engineering, support, and sustainment services. The Technologies segment provides information technology solutions and mission support services; mobile communication, computers, and command-and-control mission systems; intelligence, surveillance, and reconnaissance solutions to military, intelligence, and federal civilian customers; cloud computing, artificial intelligence; machine learning; big data analytics; development, security, and operations; and unmanned undersea vehicle manufacturing and assembly services. The company was founded in 1899 and is headquartered in Reston, Virginia.