Head-To-Head Contrast: Rheinmetall (OTCMKTS:RNMBY) and Woodward (NASDAQ:WWD)

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

Profitability

This table compares Rheinmetall and Woodward’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Rheinmetall	7.08%	21.40%	7.13%
Woodward	12.85%	20.12%	10.72%

Institutional & Insider Ownership

81.2% of Woodward shares are held by institutional investors. 0.7% of Woodward shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Rheinmetall and Woodward”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rheinmetall	$11.24 billion	6.22	$787.45 million	$2.13	140.96
Woodward	$3.57 billion	5.85	$442.11 million	$8.35	41.92

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

Volatility and Risk

Rheinmetall has a beta of 0.16, meaning that its stock price is 84% less volatile than the S&P 500. Comparatively, Woodward has a beta of 0.92, meaning that its stock price is 8% less volatile than the S&P 500.

Dividends

Rheinmetall pays an annual dividend of $1.90 per share and has a dividend yield of 0.6%. Woodward pays an annual dividend of $1.28 per share and has a dividend yield of 0.4%. Rheinmetall pays out 89.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Woodward pays out 15.3% of its earnings in the form of a dividend. Woodward has increased its dividend for 5 consecutive years.

Analyst Recommendations

This is a summary of current ratings and price targets for Rheinmetall and Woodward, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rheinmetall	0	1	7	1	3.00
Woodward	0	4	11	1	2.81

Woodward has a consensus price target of $393.00, indicating a potential upside of 12.28%. Given Woodward’s higher possible upside, analysts clearly believe Woodward is more favorable than Rheinmetall.

Summary

Woodward beats Rheinmetall on 10 of the 17 factors compared between the two stocks.

About Rheinmetall

Rheinmetall AG provides mobility and security technologies worldwide. The company operates in five segments: Vehicle Systems, Weapon and Ammunition, Electronic Solutions, Sensors and Actuators, and Materials and Trade. The Vehicle Systems segment offers combat, logistics, support, and special vehicles, including armored tracked vehicles, CBRN protection systems, artillery, turret systems, and wheeled logistics and tactical vehicles. The Weapon and Ammunition segment provides firepower and protection solutions, such as weapons and munition, protection systems, propellants and international projects and services. The Electronic Solutions segment offers a chain of systems network, such as sensors, networking platforms, automated connected effectors for soldiers, and cyberspace protection solutions, and training and simulation solutions. Its products include air defense systems; soldier systems; command, control, and reconnaissance systems; fire control systems; sensors; and simulations for the army, air force, navy, and civil applications. The Sensors and Actuators segment provides a portfolio of products comprising exhaust gas recirculation systems; throttle valves, control dampers, and exhaust flaps for electromotors; solenoid valves; actuators and valve train systems; oil, water, and vacuum pumps for passenger cars, commercial vehicles, and light and heavy-duty off-road applications; and industrial solutions. The Materials and Trade segment develops system components for the basic motors, such as engine blocks, structural components, and cylinder heads; plain bearings, and bushes; and replacement parts. It also engages in the aftermarket activities. The company was formerly known as Rheinmetall Berlin AG and changed its name to Rheinmetall AG in 1996. Rheinmetall AG was founded in 1889 and is headquartered in Düsseldorf, Germany.

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.