Comparing Howmet Aerospace (NYSE:HWM) and General Dynamics (NYSE:GD)

Howmet Aerospace (NYSE:HWM) and General Dynamics (NYSE:GD) are both large-cap aerospace companies, but which is the better business? We will contrast the two companies based on the strength of their risk, profitability, earnings, dividends, analyst recommendations, valuation and institutional ownership.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Howmet Aerospace	18.09%	28.17%	12.26%
General Dynamics	8.13%	17.99%	7.21%

Analyst Recommendations

This is a summary of recent recommendations for Howmet Aerospace and General Dynamics, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Howmet Aerospace	0	4	14	1	2.84
General Dynamics	1	12	9	0	2.36

Howmet Aerospace currently has a consensus price target of $172.13, indicating a potential downside of 6.27%. General Dynamics has a consensus price target of $315.78, indicating a potential downside of 2.19%. Given General Dynamics’ higher possible upside, analysts plainly believe General Dynamics is more favorable than Howmet Aerospace.

Volatility and Risk

Howmet Aerospace has a beta of 1.45, suggesting that its stock price is 45% more volatile than the S&P 500. Comparatively, General Dynamics has a beta of 0.5, suggesting that its stock price is 50% less volatile than the S&P 500.

Valuation and Earnings

This table compares Howmet Aerospace and General Dynamics”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Howmet Aerospace	$7.43 billion	9.96	$1.16 billion	$3.42	53.70
General Dynamics	$47.72 billion	1.82	$3.78 billion	$14.90	21.67

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

Institutional & Insider Ownership

90.5% of Howmet Aerospace shares are owned by institutional investors. Comparatively, 86.1% of General Dynamics shares are owned by institutional investors. 1.0% of Howmet Aerospace shares are owned by company insiders. Comparatively, 1.5% of General Dynamics shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

Howmet Aerospace pays an annual dividend of $0.48 per share and has a dividend yield of 0.3%. General Dynamics pays an annual dividend of $6.00 per share and has a dividend yield of 1.9%. Howmet Aerospace pays out 14.0% of its earnings in the form of a dividend. General Dynamics pays out 40.3% 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. Howmet Aerospace has increased its dividend for 5 consecutive years and General Dynamics has increased its dividend for 34 consecutive years. General Dynamics is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Howmet Aerospace beats General Dynamics on 11 of the 18 factors compared between the two stocks.

About Howmet Aerospace

Howmet Aerospace Inc. provides advanced engineered solutions for the aerospace and transportation industries in the United States, Japan, France, Germany, the United Kingdom, Mexico, Italy, Canada, Poland, China, and internationally. It operates through four segments: Engine Products, Fastening Systems, Engineered Structures, and Forged Wheels. The Engine Products segment offers airfoils and seamless rolled rings primarily for aircraft engines and industrial gas turbines; and rotating and structural parts. The Fastening Systems segment produces aerospace fastening systems, as well as commercial transportation, industrial, and other fasteners; and latches, bearings, fluid fittings, and installation tools. The Engineered Structures segment provides titanium ingots and mill products, aluminum and nickel forgings, and machined components and assemblies for aerospace and defense applications; and titanium forgings, extrusions, and forming and machining services for airframe, wing, aero-engine, and landing gear components. The Forged Wheels segment offers forged aluminum wheels and related products for heavy-duty trucks and commercial transportation markets. The company was formerly known as Arconic Inc. Howmet Aerospace Inc. was founded in 1888 and is based in Pittsburgh, Pennsylvania.

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.