Critical Review: L3Harris Technologies (NYSE:LHX) & MTU Aero Engines (OTCMKTS:MTUAY)

MTU Aero Engines (OTCMKTS:MTUAY) and L3Harris Technologies (NYSE:LHX) are both large-cap aerospace companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, earnings, risk, institutional ownership, profitability and dividends.

Dividends

MTU Aero Engines pays an annual dividend of $0.82 per share and has a dividend yield of 0.4%. L3Harris Technologies pays an annual dividend of $4.80 per share and has a dividend yield of 1.7%. MTU Aero Engines pays out 8.9% of its earnings in the form of a dividend. L3Harris Technologies pays out 51.6% 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. L3Harris Technologies has raised its dividend for 24 consecutive years. L3Harris Technologies is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares MTU Aero Engines and L3Harris Technologies”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MTU Aero Engines	$8.02 billion	2.77	$684.97 million	$9.23	22.37
L3Harris Technologies	$21.33 billion	2.48	$1.50 billion	$9.31	30.35

L3Harris Technologies has higher revenue and earnings than MTU Aero Engines. MTU Aero Engines is trading at a lower price-to-earnings ratio than L3Harris Technologies, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and price targets for MTU Aero Engines and L3Harris Technologies, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MTU Aero Engines	0	4	2	1	2.57
L3Harris Technologies	0	8	11	0	2.58

L3Harris Technologies has a consensus price target of $295.50, suggesting a potential upside of 4.59%. Given L3Harris Technologies’ stronger consensus rating and higher possible upside, analysts plainly believe L3Harris Technologies is more favorable than MTU Aero Engines.

Profitability

This table compares MTU Aero Engines and L3Harris Technologies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MTU Aero Engines	10.79%	25.61%	7.77%
L3Harris Technologies	8.09%	11.08%	5.19%

Risk & Volatility

MTU Aero Engines has a beta of 1.11, indicating that its share price is 11% more volatile than the S&P 500. Comparatively, L3Harris Technologies has a beta of 0.65, indicating that its share price is 35% less volatile than the S&P 500.

Insider & Institutional Ownership

0.0% of MTU Aero Engines shares are owned by institutional investors. Comparatively, 84.8% of L3Harris Technologies shares are owned by institutional investors. 0.7% of L3Harris Technologies shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

L3Harris Technologies beats MTU Aero Engines on 11 of the 18 factors compared between the two stocks.

About MTU Aero Engines

MTU Aero Engines AG, together with its subsidiaries, engages in the development, manufacture, marketing, and maintenance of commercial and military aircraft engines, and aero-derivative industrial gas turbines in Germany, other European countries, North America, Asia, and internationally. It operates through two segments: Original Equipment Manufacturing (OEM Business); and Maintenance, Repair, and Overhaul (MRO Business). The company offers commercial aircraft engines for wide body jets, narrow body and regional jets, business jets, and turboprops; military aircraft engines for fighter jets, helicopters, and transporters; and industrial gas turbines. It also maintains, repairs, and overhauls commercial and military engines; and manufactures and markets various spare parts. The company was formerly known as MTU Aero Engines Holding AG and changed its name to MTU Aero Engines AG in May 2013. MTU Aero Engines AG was founded in 1913 and is headquartered in Munich, Germany.

About L3Harris Technologies

L3Harris Technologies, Inc. provides mission-critical solutions for government and commercial customers worldwide. The company's Integrated Mission Systems segment provides intelligence, surveillance, and reconnaissance (ISR) systems, passive sensing and targeting, electronic attack, autonomy, power and communications, and networks and sensors, as well as advanced combat systems for air, land, and sea sectors. Its Space and Airborne Systems segment offers space payloads, sensors, and full-mission solutions; classified intelligence and cyber; mission avionics; electronic warfare systems; and mission networks systems for air traffic management operations. The company's Communication Systems segment provides broadband communications; tactical radios, software, satellite terminals, and end-to-end battlefield systems for the U.S. Department of Defense, international, federal, and state agency customers; integrated vision solutions, including helmet-mounted integrated night vision goggles with leading-edge image intensifier tubes and weapon-mounted sights, aiming lasers, and range finders; and public safety radios, and system applications and equipment. Its Aerojet Rocketdyne segment provides propulsion technologies and armament systems for strategic defense, missile defense, hypersonic, and tactical systems; and space propulsion and power systems for national security, and space and exploration missions. The company was formerly known as Harris Corporation and changed its name to L3Harris Technologies, Inc. in June 2019. L3Harris Technologies, Inc. was founded in 1895 and is based in Melbourne, Florida.