Contrasting Kratos Defense & Security Solutions (NASDAQ:KTOS) & Woodward (NASDAQ:WWD)

Woodward (NASDAQ:WWD) and Kratos Defense & Security Solutions (NASDAQ:KTOS) are both large-cap aerospace companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, earnings, analyst recommendations, valuation and dividends.

Institutional and Insider Ownership

81.2% of Woodward shares are held by institutional investors. Comparatively, 75.9% of Kratos Defense & Security Solutions shares are held by institutional investors. 0.7% of Woodward shares are held by company insiders. Comparatively, 2.4% of Kratos Defense & Security Solutions shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Risk & Volatility

Woodward has a beta of 1, meaning that its stock price has a similar volatility profile to the S&P 500.Comparatively, Kratos Defense & Security Solutions has a beta of 1.09, meaning that its stock price is 9% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings for Woodward and Kratos Defense & Security Solutions, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Woodward	0	4	9	1	2.79
Kratos Defense & Security Solutions	0	6	15	1	2.77

Woodward presently has a consensus price target of $354.80, indicating a potential downside of 9.67%. Kratos Defense & Security Solutions has a consensus price target of $93.83, indicating a potential downside of 0.51%. Given Kratos Defense & Security Solutions’ higher possible upside, analysts clearly believe Kratos Defense & Security Solutions is more favorable than Woodward.

Profitability

This table compares Woodward and Kratos Defense & Security Solutions’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Woodward	12.89%	19.07%	10.23%
Kratos Defense & Security Solutions	1.56%	3.14%	2.34%

Valuation and Earnings

This table compares Woodward and Kratos Defense & Security Solutions”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Woodward	$3.57 billion	6.56	$442.11 million	$7.94	49.47
Kratos Defense & Security Solutions	$1.28 billion	12.50	$16.30 million	$0.13	725.46

Woodward has higher revenue and earnings than Kratos Defense & Security Solutions. Woodward is trading at a lower price-to-earnings ratio than Kratos Defense & Security Solutions, indicating that it is currently the more affordable of the two stocks.

Summary

Woodward beats Kratos Defense & Security Solutions on 8 of the 14 factors compared between the two stocks.

About Woodward

Woodward, Inc. designs, manufactures, and services control solutions for the aerospace and industrial markets worldwide. The company operates in two segments, Aerospace and Industrial. The Aerospace segment provides fuel pumps, metering units, actuators, air valves, specialty valves, fuel nozzles, and thrust reverser actuation systems for turbine engines and nacelles, and flight deck controls, actuators, servocontrols, motors, and sensors for aircraft. These products are used on commercial and private aircraft and rotorcraft, as well as on military fixed-wing aircraft and rotorcraft, guided weapons, and other defense systems. It also provides aftermarket maintenance, repair and overhaul, and other services to commercial airlines, repair facilities, military depots, third party repair shops, and other end users. This segment sells its products to original equipment manufacturers (OEMs), tier-one suppliers, and contractors, as well as through aftermarket sales of components, such as provisioning spares and replacements. The Industrial segment offers actuators, valves, pumps, fuel injection systems, solenoids, ignition systems, speed controls, electronics and software, and sensors. These products are used on industrial gas turbines, steam turbines, compressors, and reciprocating engines. This segment sells its aftermarket products, and other related services to OEMs through an independent network of distributors, as well as directly to end users. The company was founded in 1870 and is headquartered in Fort Collins, Colorado.

About Kratos Defense & Security Solutions

Kratos Defense & Security Solutions, Inc. engages in the provision of mission critical products, services and solutions for United States national security priorities. It operates through the Kratos Government Solutions (KGS) and Unmanned Systems (US) segments. The KGS segment consists of an aggregation of KGS operating segments, including microwave electronic products, space, satellite and cyber, training solutions. The US segment refers to the unmanned aerial, unmanned ground, unmanned seaborne and related command, control and communications system businesses. The company was founded on December 19, 1994, and is headquartered in Round Rock, TX.