Head to Head Contrast: Howmet Aerospace (NYSE:HWM) vs. Northrop Grumman (NYSE:NOC)

Howmet Aerospace (NYSE:HWM) and Northrop Grumman (NYSE:NOC) are both large-cap aerospace companies, but which is the superior stock? We will contrast the two businesses based on the strength of their dividends, institutional ownership, profitability, risk, earnings, analyst recommendations and valuation.

Earnings & Valuation

This table compares Howmet Aerospace and Northrop Grumman”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Howmet Aerospace	$8.25 billion	10.81	$1.51 billion	$3.71	59.96
Northrop Grumman	$41.95 billion	2.27	$4.18 billion	$29.13	23.00

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

Volatility & Risk

Howmet Aerospace has a beta of 1.2, meaning that its share price is 20% more volatile than the S&P 500. Comparatively, Northrop Grumman has a beta of 0.03, meaning that its share price is 97% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Howmet Aerospace and Northrop Grumman, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Howmet Aerospace	0	5	18	1	2.83
Northrop Grumman	0	9	11	1	2.62

Howmet Aerospace presently has a consensus price target of $256.15, suggesting a potential upside of 15.15%. Northrop Grumman has a consensus price target of $693.60, suggesting a potential upside of 3.54%. Given Howmet Aerospace’s stronger consensus rating and higher possible upside, analysts plainly believe Howmet Aerospace is more favorable than Northrop Grumman.

Profitability

This table compares Howmet Aerospace and Northrop Grumman’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Howmet Aerospace	18.27%	30.41%	13.88%
Northrop Grumman	9.97%	25.57%	8.13%

Dividends

Howmet Aerospace pays an annual dividend of $0.48 per share and has a dividend yield of 0.2%. Northrop Grumman pays an annual dividend of $9.24 per share and has a dividend yield of 1.4%. Howmet Aerospace pays out 12.9% of its earnings in the form of a dividend. Northrop Grumman pays out 31.7% 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 raised its dividend for 5 consecutive years and Northrop Grumman has raised its dividend for 22 consecutive years. Northrop Grumman is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

90.5% of Howmet Aerospace shares are held by institutional investors. Comparatively, 83.4% of Northrop Grumman shares are held by institutional investors. 1.1% of Howmet Aerospace shares are held by company insiders. Comparatively, 0.2% of Northrop Grumman shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Howmet Aerospace beats Northrop Grumman on 12 of the 17 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 Northrop Grumman

Northrop Grumman Corporation operates as an aerospace and defense technology company in the United States, Asia/Pacific, Europe, and internationally. The company’s Aeronautics Systems segment designs, develops, manufactures, integrates, and sustains aircraft systems. This segment also offers unmanned autonomous aircraft systems, including high-altitude long-endurance strategic ISR systems and vertical take-off and landing tactical ISR systems; and strategic long-range strike aircraft, tactical fighter and air dominance aircraft, and airborne battle management and command and control systems. Its Defense Systems segment designs, develops, integrates, and produces tactical weapons and missile defense solutions, and provides sustainment, modernization, and training services for manned and unmanned aircraft and electronics systems. It also offers integrated, all-domain command, and control battle management systems, precision strike weapons; high speed air-breathing and hypersonic systems; high-performance gun systems, ammunition, precision munitions and advanced fuzes; aircraft and mission systems logistics support, sustainment, operations and modernization; and warfighter training services. The company’s Mission Systems segment offers command, control, communications and computers, intelligence, surveillance, and reconnaissance systems; radar, electro-optical/infrared and acoustic sensors; electronic warfare systems; advanced communications and network systems; cyber solutions; intelligence processing systems; navigation; and maritime power, propulsion, and payload launch systems. Its Space Systems segment offers satellites, spacecraft systems, subsystems, sensors, and payloads; ground systems; missile defense systems and interceptors; launch vehicles and related propulsion systems; and strategic missiles. Northrop Grumman Corporation was founded in 1939 and is based in Falls Church, Virginia.