Financial Analysis: General Dynamics (NYSE:GD) vs. Rocket Lab (NASDAQ:RKLB)

General Dynamics (NYSE:GD) and Rocket Lab (NASDAQ:RKLB) are both large-cap industrials companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, analyst recommendations, valuation, institutional ownership, earnings, profitability and risk.

Risk & Volatility

General Dynamics has a beta of 0.33, indicating that its stock price is 67% less volatile than the S&P 500. Comparatively, Rocket Lab has a beta of 2.93, indicating that its stock price is 193% more volatile than the S&P 500.

Earnings & Valuation

This table compares General Dynamics and Rocket Lab”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
General Dynamics	$52.55 billion	1.80	$4.21 billion	$16.39	21.37
Rocket Lab	$769.15 million	39.85	-$198.21 million	($0.27)	-189.70

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

Profitability

This table compares General Dynamics and Rocket Lab’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
General Dynamics	8.18%	17.43%	7.67%
Rocket Lab	-21.51%	-6.48%	-4.92%

Insider and Institutional Ownership

86.1% of General Dynamics shares are owned by institutional investors. Comparatively, 71.8% of Rocket Lab shares are owned by institutional investors. 1.4% of General Dynamics shares are owned by company insiders. Comparatively, 8.4% of Rocket Lab shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and price targets for General Dynamics and Rocket Lab, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
General Dynamics	1	5	12	1	2.68
Rocket Lab	1	5	14	3	2.83

General Dynamics presently has a consensus price target of $402.32, suggesting a potential upside of 14.85%. Rocket Lab has a consensus price target of $102.05, suggesting a potential upside of 99.24%. Given Rocket Lab’s stronger consensus rating and higher possible upside, analysts clearly believe Rocket Lab is more favorable than General Dynamics.

Summary

General Dynamics beats Rocket Lab on 8 of the 15 factors compared between the two stocks.

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.

About Rocket Lab

Rocket Lab USA, Inc., a space company, provides launch services and space systems solutions for the space and defense industries. The company provides launch services, spacecraft design services, spacecraft components, spacecraft manufacturing, and other spacecraft and on-orbit management solutions; and constellation management services, as well as designs and manufactures small and medium-class rockets. It also designs, manufactures, and sells Electron, a reusable orbital-class small rocket; and the Photon satellite platforms, as well as developing the Neutron 8-ton payload class launch vehicle; conducts remote launch activities; and designs and manufactures a range of components and subsystems for the Photon family of spacecraft and broader merchant spacecraft components. The company serves commercial, aerospace prime contractors, and government customers. Rocket Lab USA, Inc. was founded in 2006 and is headquartered in Long Beach, California.