Analyzing Moog (NYSE:MOG.B) & Heico (NYSE:HEI)

Moog (NYSE:MOG.B) and Heico (NYSE:HEI) are both large-cap industrials companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, earnings, valuation, institutional ownership, risk, profitability and analyst recommendations.

Profitability

This table compares Moog and Heico’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Moog	8.73%	17.67%	7.94%
Heico	16.38%	18.00%	9.15%

Risk and Volatility

Moog has a beta of 0.81, indicating that its share price is 19% less volatile than the S&P 500. Comparatively, Heico has a beta of 1.09, indicating that its share price is 9% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Moog and Heico, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Moog	0	1	0	0	2.00
Heico	0	7	9	2	2.72

Heico has a consensus price target of $387.33, suggesting a potential upside of 12.19%. Given Heico’s stronger consensus rating and higher possible upside, analysts clearly believe Heico is more favorable than Moog.

Earnings & Valuation

This table compares Moog and Heico”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Moog	$3.86 billion	2.82	$235.03 million	$11.76	29.18
Heico	$4.49 billion	10.76	$690.39 million	$6.01	57.44

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

Dividends

Moog pays an annual dividend of $1.20 per share and has a dividend yield of 0.3%. Heico pays an annual dividend of $0.26 per share and has a dividend yield of 0.1%. Moog pays out 10.2% of its earnings in the form of a dividend. Heico pays out 4.3% 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. Heico has increased its dividend for 17 consecutive years.

Insider and Institutional Ownership

8.1% of Moog shares are held by institutional investors. Comparatively, 27.1% of Heico shares are held by institutional investors. 2.4% of Moog shares are held by company insiders. Comparatively, 4.9% of Heico shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Heico beats Moog on 16 of the 18 factors compared between the two stocks.

About Moog

Moog Inc. designs and manufactures precision motion-control products and systems for aerospace, defense, and industrial customers. Its offerings include actuation and flight-control systems, motion-control components, and equipment used in applications such as aircraft, spacecraft, defense systems, industrial machinery, and simulation and testing. Founded in 1951 by engineer William C. Moog, the company grew from its early work in servo valves into a global supplier of motion-control technology.

About Heico

HEICO Corporation is an aerospace and electronics company that develops, manufactures and services products for commercial aviation, defense, space and other markets. Its Flight Support Group supplies replacement parts for aircraft and provides repair and overhaul services for aircraft components, while its Electronic Technologies Group makes specialized electronic, electro-optical and other technology products. The company’s products and services support airlines, aircraft operators, original equipment manufacturers, government agencies and defense contractors.