Contrasting Lockheed Martin Corporation (LMT) & AAR Corp. (AIR)

Lockheed Martin Corporation (NYSE: LMT) and AAR Corp. (NYSE:AIR) are both aerospace companies, but which is the better investment? We will compare the two businesses based on the strength of their profitabiliy, earnings, dividends, risk, valuation, analyst recommendations and institutional ownership.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Lockheed Martin Corporation and AAR Corp., as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Lockheed Martin Corporation 0 8 8 0 2.50
AAR Corp. 0 0 4 0 3.00

Lockheed Martin Corporation presently has a consensus target price of $280.10, suggesting a potential downside of 0.36%. AAR Corp. has a consensus target price of $48.75, suggesting a potential upside of 38.57%. Given AAR Corp.’s stronger consensus rating and higher probable upside, analysts clearly believe AAR Corp. is more favorable than Lockheed Martin Corporation.

Volatility and Risk

Lockheed Martin Corporation has a beta of 0.6, meaning that its share price is 40% less volatile than the S&P 500. Comparatively, AAR Corp. has a beta of 1.41, meaning that its share price is 41% more volatile than the S&P 500.

Insider and Institutional Ownership

80.0% of Lockheed Martin Corporation shares are held by institutional investors. Comparatively, 90.2% of AAR Corp. shares are held by institutional investors. 0.4% of Lockheed Martin Corporation shares are held by insiders. Comparatively, 8.2% of AAR Corp. shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Dividends

Lockheed Martin Corporation pays an annual dividend of $7.28 per share and has a dividend yield of 2.6%. AAR Corp. pays an annual dividend of $0.30 per share and has a dividend yield of 0.9%. Lockheed Martin Corporation pays out 42.3% of its earnings in the form of a dividend. AAR Corp. pays out 21.7% 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. AAR Corp. has increased its dividend for 14 consecutive years.

Profitability

This table compares Lockheed Martin Corporation and AAR Corp.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Lockheed Martin Corporation 10.49% 183.15% 8.06%
AAR Corp. 2.73% 5.32% 3.16%

Earnings & Valuation

This table compares Lockheed Martin Corporation and AAR Corp.’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Lockheed Martin Corporation $47.94 billion 1.70 $6.05 billion $17.21 16.33
AAR Corp. $1.71 billion 0.69 $130.80 million $1.38 25.49

Lockheed Martin Corporation has higher revenue and earnings than AAR Corp.. Lockheed Martin Corporation is trading at a lower price-to-earnings ratio than AAR Corp., indicating that it is currently the more affordable of the two stocks.

Summary

Lockheed Martin Corporation beats AAR Corp. on 9 of the 17 factors compared between the two stocks.

About Lockheed Martin Corporation

Lockheed Martin Corporation is a security and aerospace company. The Company operates through four segments. Aeronautics segment is engaged in the research, design, development, manufacture, integration, sustainment, support and upgrade of military aircraft, including combat and air mobility aircraft, unmanned air vehicles and related technologies. Missiles and Fire Control segment provides air and missile defense systems; fire control systems; manned and unmanned ground vehicles, and energy management solutions. Rotary and Mission Systems segment provides design, manufacture, service and support for a range of military and civil helicopters; mission systems and sensors for rotary and fixed-wing aircraft; simulation and training services, and unmanned systems and technologies, among others. Space Systems segment is engaged in the research and development, design, engineering and production of satellites, strategic and defensive missile systems and space transportation systems.

About AAR Corp.

AAR CORP. (AAR) is a provider of services and products to the commercial aviation and government and defense markets. The Company operates in two segments: Aviation Services, which consists of supply chain and maintenance, repair and overhaul (MRO) activities, and Expeditionary Services, which includes airlift and mobility activities. Its services and products include aviation supply chain and parts support programs; MRO of aircraft and landing gear; design and manufacture of specialized pallets, shelters and containers; expeditionary airlift services; aircraft modifications, and aircraft and engine sales and leasing. It serves commercial, defense and governmental aircraft fleet operators, original equipment manufacturers and independent service providers around the world. Its landing gear overhaul facility is in Miami, Florida, where it repairs and overhauls landing gear, brakes and actuators for various types of commercial and military aircraft.

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