Critical Review: Esterline Technologies (ESL) versus Northrop Grumman (NOC)

Esterline Technologies (NYSE: ESL) and Northrop Grumman (NYSE:NOC) are both industrials companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, dividends, profitability, earnings, analyst recommendations, valuation and institutional ownership.

Dividends

Northrop Grumman pays an annual dividend of $4.00 per share and has a dividend yield of 1.1%. Esterline Technologies does not pay a dividend. Northrop Grumman pays out 30.3% of its earnings in the form of a dividend. Esterline Technologies has raised its dividend for 10 consecutive years.

Insider & Institutional Ownership

90.5% of Esterline Technologies shares are owned by institutional investors. Comparatively, 81.2% of Northrop Grumman shares are owned by institutional investors. 1.3% of Esterline Technologies shares are owned by insiders. Comparatively, 0.7% of Northrop Grumman shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Esterline Technologies and Northrop Grumman’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Esterline Technologies 3.31% 6.89% 3.96%
Northrop Grumman 7.81% 37.28% 8.28%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Esterline Technologies and Northrop Grumman, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Esterline Technologies 3 5 0 0 1.63
Northrop Grumman 0 4 10 0 2.71

Esterline Technologies presently has a consensus price target of $79.71, suggesting a potential upside of 5.65%. Northrop Grumman has a consensus price target of $330.24, suggesting a potential downside of 7.24%. Given Esterline Technologies’ higher possible upside, equities analysts plainly believe Esterline Technologies is more favorable than Northrop Grumman.

Valuation & Earnings

This table compares Esterline Technologies and Northrop Grumman’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Esterline Technologies $2.00 billion 1.12 $117.38 million $2.30 32.80
Northrop Grumman $25.80 billion 2.40 $2.02 billion $13.18 27.01

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

Volatility & Risk

Esterline Technologies has a beta of 1.36, meaning that its share price is 36% more volatile than the S&P 500. Comparatively, Northrop Grumman has a beta of 0.82, meaning that its share price is 18% less volatile than the S&P 500.

Summary

Northrop Grumman beats Esterline Technologies on 10 of the 17 factors compared between the two stocks.

Esterline Technologies Company Profile

Esterline Technologies Corporation is a specialized manufacturing company. The Company designs, manufactures and markets engineered products and systems for application within the industries it serves. The Company operates through three segments: Avionics & Controls, Sensors & Systems, and Advanced Materials. The Company serves aerospace and defense customers. The Company’s Avionics & Controls business segment includes avionics systems, control and communication systems, and interface technologies capabilities. The Company’s Sensors & Systems business segment includes power systems, connection technologies and advanced sensors capabilities. The Company’s Advanced Materials business segment includes engineered materials and defense technologies capabilities. The Company designs and manufactures ruggedized military personal communication equipment, primarily headsets, handsets and field communications.

Northrop Grumman Company Profile

Northrop Grumman Corporation is a global security company. The Company provides products, systems and solutions in autonomous systems; cyber; command, control, communications and computers, intelligence, surveillance and reconnaissance (C4ISR); strike, and logistics and modernization. The Company’s segments include Aerospace Systems, Mission Systems and Technology Services. The Company’s Aerospace Systems segment is engaged in the design, development, integration and production of manned aircraft, autonomous systems, spacecraft, high-energy laser systems, microelectronics and other systems/subsystems. The Mission Systems segment offers mission solutions and multifunction systems for Department of Defense (DoD), intelligence community, international, federal civil and commercial customers. The Technology Services segment provides logistics solutions supporting the full life cycle of platforms and systems for global defense and federal-civil customers.

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