Analyzing Textron (NYSE:TXT) and Lockheed Martin (NYSE:LMT)

Textron (NYSE:TXT) and Lockheed Martin (NYSE:LMT) are both large-cap aerospace companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, dividends, earnings, risk, analyst recommendations, profitability and valuation.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Textron	6.22%	14.63%	6.33%
Lockheed Martin	6.69%	108.53%	11.48%

Risk and Volatility

Textron has a beta of 0.99, indicating that its share price is 1% less volatile than the S&P 500. Comparatively, Lockheed Martin has a beta of 0.23, indicating that its share price is 77% less volatile than the S&P 500.

Earnings & Valuation

This table compares Textron and Lockheed Martin”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Textron	$14.80 billion	1.16	$921.00 million	$5.11	19.32
Lockheed Martin	$75.05 billion	2.03	$5.02 billion	$21.49	30.76

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

Dividends

Textron pays an annual dividend of $0.08 per share and has a dividend yield of 0.1%. Lockheed Martin pays an annual dividend of $13.80 per share and has a dividend yield of 2.1%. Textron pays out 1.6% of its earnings in the form of a dividend. Lockheed Martin pays out 64.2% 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. Lockheed Martin has raised its dividend for 22 consecutive years. Lockheed Martin is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of current ratings and price targets for Textron and Lockheed Martin, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Textron	0	7	4	1	2.50
Lockheed Martin	1	14	6	0	2.24

Textron presently has a consensus target price of $98.60, suggesting a potential downside of 0.13%. Lockheed Martin has a consensus target price of $612.50, suggesting a potential downside of 7.36%. Given Textron’s stronger consensus rating and higher possible upside, analysts plainly believe Textron is more favorable than Lockheed Martin.

Insider and Institutional Ownership

86.0% of Textron shares are held by institutional investors. Comparatively, 74.2% of Lockheed Martin shares are held by institutional investors. 1.7% of Textron shares are held by company insiders. Comparatively, 0.1% of Lockheed Martin shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Lockheed Martin beats Textron on 11 of the 18 factors compared between the two stocks.

About Textron

Textron Inc. operates in the aircraft, defense, industrial, and finance businesses worldwide. It operates through six segments: Textron Aviation, Bell, Textron Systems, Industrial, Textron eAviation, and Finance. The Textron Aviation segment manufactures, sells, and services business jets, turboprop and piston engine aircraft, and military trainer and defense aircraft; and offers maintenance, inspection, and repair services, as well as sells commercial parts. The Bell segment supplies military and commercial helicopters, tiltrotor aircrafts, and related spare parts and services. The Textron Systems segment offers unmanned aircraft systems, electronic systems and solutions, advanced marine crafts, piston aircraft engines, live military air-to-air and air-to-ship training, weapons and related components, and armored and specialty vehicles. The Industrial segment offers blow-molded solutions, including conventional plastic fuel tanks and pressurized fuel tanks for hybrid vehicle applications, clear-vision systems, plastic tanks for catalytic reduction systems, and battery housing systems for use in electric vehicles primarily to automobile original equipment manufacturers (OEMs); and golf cars, off-road utility vehicles, powersports products, light transportation vehicles, aviation ground support equipment, professional turf-maintenance equipment, and turf-care vehicles to golf courses and resorts, government agencies and municipalities, consumers, outdoor enthusiasts, and commercial and industrial users. The Textron eAviation segment manufactures and sells light aircraft and gliders with electric and combustion engines; and provides other research and development initiatives related to sustainable aviation solutions. The Finance segment offers financing services to purchase new and pre-owned aviation aircraft and Bell helicopters. Textron Inc. was founded in 1923 and is headquartered in Providence, Rhode Island.

About Lockheed Martin

Lockheed Martin Corporation, a security and aerospace company, engages in the research, design, development, manufacture, integration, and sustainment of technology systems, products, and services worldwide. The company operates through Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space segments. The Aeronautics segment offers combat and air mobility aircraft, unmanned air vehicles, and related technologies. The Missiles and Fire Control segment provides air and missile defense systems; tactical missiles and air-to-ground precision strike weapon systems; logistics; fire control systems; mission operations support, readiness, engineering support, and integration services; manned and unmanned ground vehicles; and energy management solutions. The Rotary and Mission Systems segment offers military and commercial helicopters, surface ships, sea and land-based missile defense systems, radar systems, sea and air-based mission and combat systems, command and control mission solutions, cyber solutions, and simulation and training solutions. The Space segment offers satellites; space transportation systems; strategic, advanced strike, and defensive systems; and classified systems and services in support of national security systems. This segment also provides network-enabled situational awareness and integrates space and ground global systems to help its customers gather, analyze, and securely distribute critical intelligence data. It serves primarily serves the U.S. government, as well as foreign military sales contracted through the U.S. government. The company was founded in 1912 and is based in Bethesda, Maryland.