Comparing Northrop Grumman (NYSE:NOC) and Rolls-Royce Holdings PLC (OTCMKTS:RYCEY)

Rolls-Royce Holdings PLC (OTCMKTS:RYCEY) and Northrop Grumman (NYSE:NOC) are both large-cap industrials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their valuation, dividends, risk, institutional ownership, analyst recommendations, earnings and profitability.

Volatility & Risk

Rolls-Royce Holdings PLC has a beta of 1.19, meaning that its share price is 19% more volatile than the S&P 500. Comparatively, Northrop Grumman has a beta of -0.11, meaning that its share price is 111% less volatile than the S&P 500.

Dividends

Rolls-Royce Holdings PLC pays an annual dividend of $0.16 per share and has a dividend yield of 0.8%. Northrop Grumman pays an annual dividend of $9.88 per share and has a dividend yield of 1.7%. Northrop Grumman pays out 31.4% of its earnings in the form of a dividend. 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.

Earnings and Valuation

This table compares Rolls-Royce Holdings PLC and Northrop Grumman”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rolls-Royce Holdings PLC	$27.96 billion	6.18	$7.70 billion	N/A	N/A
Northrop Grumman	$41.95 billion	1.98	$4.18 billion	$31.48	18.59

Rolls-Royce Holdings PLC has higher earnings, but lower revenue than Northrop Grumman.

Profitability

This table compares Rolls-Royce Holdings PLC and Northrop Grumman’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Rolls-Royce Holdings PLC	N/A	N/A	N/A
Northrop Grumman	10.48%	24.25%	8.15%

Analyst Recommendations

This is a summary of recent recommendations and price targets for Rolls-Royce Holdings PLC and Northrop Grumman, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rolls-Royce Holdings PLC	0	0	4	1	3.20
Northrop Grumman	0	8	11	1	2.65

Northrop Grumman has a consensus price target of $659.30, indicating a potential upside of 12.67%. Given Northrop Grumman’s higher probable upside, analysts clearly believe Northrop Grumman is more favorable than Rolls-Royce Holdings PLC.

Institutional and Insider Ownership

0.1% of Rolls-Royce Holdings PLC shares are held by institutional investors. Comparatively, 83.4% of Northrop Grumman shares are held by institutional investors. 0.2% of Northrop Grumman shares are held 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

Northrop Grumman beats Rolls-Royce Holdings PLC on 10 of the 15 factors compared between the two stocks.

About Rolls-Royce Holdings PLC

Rolls-Royce Holdings plc develops and delivers complex power and propulsion solutions for air, sea, and land in the United Kingdom and internationally. The company operates through four segments: Civil Aerospace, Defence, Power Systems, and New Markets. The Civil Aerospace segment develops, manufactures, markets, and sells aero engines for large commercial aircraft, regional jet, and business aviation markets, as well as provides aftermarket services. The Defence segment is involved in the development, manufacture, marketing, and sale of military aero engines, naval engines, and submarine nuclear power plants, as well as offers aftermarket services. The Power Systems segment engages in the development, manufacture, marketing, and sale of integrated solutions for onsite power and propulsion under the mtu brand name. The New Markets segment develops, manufactures, and sells small modular reactor and new electrical power solutions. Rolls-Royce Holdings plc was founded in 1884 and is headquartered in London, the United Kingdom.

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.