Raytheon (RTN) versus Exelis (XLS) Head to Head Contrast

Raytheon (NYSE: RTN) and Exelis (NYSE:XLS) are both aerospace companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, risk, earnings, valuation, analyst recommendations, dividends and institutional ownership.

Dividends

Raytheon pays an annual dividend of $3.19 per share and has a dividend yield of 1.5%. Exelis does not pay a dividend. Raytheon pays out 45.9% of its earnings in the form of a dividend. Raytheon has raised its dividend for 13 consecutive years.

Valuation and Earnings

This table compares Raytheon and Exelis’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Raytheon $25.35 billion 2.46 $2.02 billion $6.95 31.05
Exelis N/A N/A N/A $1.23 20.07

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

Analyst Recommendations

This is a summary of current recommendations and price targets for Raytheon and Exelis, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Raytheon 0 2 14 0 2.88
Exelis 0 0 0 0 N/A

Raytheon currently has a consensus target price of $217.19, suggesting a potential upside of 0.63%. Given Raytheon’s higher possible upside, equities analysts plainly believe Raytheon is more favorable than Exelis.

Profitability

This table compares Raytheon and Exelis’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Raytheon 7.98% 21.36% 7.40%
Exelis 7.52% 18.51% 4.87%

Insider & Institutional Ownership

73.4% of Raytheon shares are held by institutional investors. 0.2% of Raytheon shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

Raytheon beats Exelis on 12 of the 13 factors compared between the two stocks.

About Raytheon

Raytheon Company is a technology company, which specializes in defense and other government markets. The Company develops integrated products, services and solutions in various markets, including sensing; effects; command, control, communications, computers, cyber and intelligence; mission support, and cybersecurity. The Company operates through five segments: Integrated Defense Systems (IDS); Intelligence, Information and Services (IIS); Missile Systems (MS); Space and Airborne Systems (SAS), and Forcepoint. The IDS segment develops and produces sensors and mission systems. The IIS segment provides a range of technical and professional services to intelligence, defense, federal and commercial customers. The MS segment is a developer, integrator and producer of missile and combat systems. The SAS segment is engaged in the design, development and manufacture of integrated sensor and communication systems for missions. The Forcepoint segment develops cybersecurity products.

About Exelis

Exelis Inc. (Exelis) is a diversified aerospace, defense, information and services company. The Company delivers mission-critical solutions to military, government and commercial customers in the United States and globally. It operates in two segments: Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance (C4ISR) Electronics and Systems, and Information and Technical Services. Its C4ISR Electronics and Systems segment provides engineered systems and solutions, including: ISR systems; integrated electronic warfare systems; radar and sonar systems; electronic attack and release systems; communications solutions; space systems, and composite aerostructures. The Company’s Information and Technical Services segment provides a range of service solutions: systems integration; network design and development; air traffic management; cyber; intelligence; advanced engineering, and space launch and range-support.

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