Head to Head Review: GE Aerospace (NYSE:GE) vs. Northrop Grumman (NYSE:NOC)

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

Insider & Institutional Ownership

74.8% of GE Aerospace shares are owned by institutional investors. Comparatively, 83.4% of Northrop Grumman shares are owned by institutional investors. 0.2% of GE Aerospace shares are owned by insiders. Comparatively, 0.2% of Northrop Grumman shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Volatility and Risk

GE Aerospace has a beta of 1.37, indicating that its share price is 37% more volatile than the S&P 500. Comparatively, Northrop Grumman has a beta of 0.15, indicating that its share price is 85% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for GE Aerospace and Northrop Grumman, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
GE Aerospace	0	1	10	0	2.91
Northrop Grumman	0	8	7	1	2.56

GE Aerospace currently has a consensus target price of $240.33, indicating a potential downside of 9.10%. Northrop Grumman has a consensus target price of $550.00, indicating a potential upside of 5.68%. Given Northrop Grumman’s higher probable upside, analysts clearly believe Northrop Grumman is more favorable than GE Aerospace.

Dividends

GE Aerospace pays an annual dividend of $1.44 per share and has a dividend yield of 0.5%. Northrop Grumman pays an annual dividend of $9.24 per share and has a dividend yield of 1.8%. GE Aerospace pays out 20.1% of its earnings in the form of a dividend. Northrop Grumman pays out 36.5% 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. GE Aerospace has increased its dividend for 2 consecutive years and Northrop Grumman has increased 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
GE Aerospace	18.64%	31.32%	4.86%
Northrop Grumman	9.19%	25.46%	7.79%

Valuation & Earnings

This table compares GE Aerospace and Northrop Grumman”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
GE Aerospace	$38.70 billion	7.29	$6.56 billion	$7.17	36.88
Northrop Grumman	$41.03 billion	1.83	$4.17 billion	$25.34	20.54

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

About GE Aerospace

GE Aerospace (also known as General Electric) is a company that specializes in providing aerospace products and services. It operates through two reportable segments: Commercial Engines and Services and Defense and Propulsion Technologies. It offers jet and turboprop engines, as well as integrated systems for commercial, military, business, and general aviation aircraft. GE demerged into GE Vernova, GE Aerospace, and GE Healthcare.

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.