Orbital ATK (NYSE: OA) and Embraer (NYSE:ERJ) are both mid-cap aerospace companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, analyst recommendations, institutional ownership, earnings, dividends and risk.
Institutional and Insider Ownership
80.6% of Orbital ATK shares are owned by institutional investors. Comparatively, 48.1% of Embraer shares are owned by institutional investors. 1.2% of Orbital ATK shares are owned by insiders. Comparatively, 1.0% of Embraer shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Orbital ATK pays an annual dividend of $1.28 per share and has a dividend yield of 1.0%. Embraer pays an annual dividend of $0.35 per share and has a dividend yield of 1.4%. Orbital ATK pays out 23.9% of its earnings in the form of a dividend. Embraer pays out 26.1% 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. Orbital ATK has raised its dividend for 2 consecutive years.
This is a breakdown of current recommendations for Orbital ATK and Embraer, as reported by MarketBeat.
||Strong Buy Ratings
Orbital ATK presently has a consensus price target of $122.58, suggesting a potential downside of 7.34%. Embraer has a consensus price target of $24.43, suggesting a potential downside of 4.43%. Given Embraer’s higher probable upside, analysts plainly believe Embraer is more favorable than Orbital ATK.
Volatility & Risk
Orbital ATK has a beta of -0.24, indicating that its stock price is 124% less volatile than the S&P 500. Comparatively, Embraer has a beta of 0.16, indicating that its stock price is 84% less volatile than the S&P 500.
Valuation & Earnings
This table compares Orbital ATK and Embraer’s revenue, earnings per share (EPS) and valuation.
||Earnings Per Share
Orbital ATK has higher earnings, but lower revenue than Embraer. Embraer is trading at a lower price-to-earnings ratio than Orbital ATK, indicating that it is currently the more affordable of the two stocks.
This table compares Orbital ATK and Embraer’s net margins, return on equity and return on assets.
||Return on Equity
||Return on Assets
Orbital ATK beats Embraer on 12 of the 17 factors compared between the two stocks.
Orbital ATK Company Profile
Orbital ATK, Inc. develops and produces aerospace and defense related products to the U.S. Government, allied nations, prime contractors, and other customers in the United States and internationally. It operates through three segments: Flight Systems Group, Defense Systems Group, and Space Systems Group. The Flight Systems Group segment develops launch vehicles that are used as small-and medium-class space launch vehicles to place satellites into Earth orbit and escape trajectories; interceptor and target vehicles for missile defense systems; suborbital launch vehicles that place payloads into various high-altitude trajectories; rocket propulsion systems for human and cargo launch vehicles; strategic missiles; missile defense interceptors and target vehicles; and composite structures for military and commercial aircraft and launch structures markets. The Defense Systems Group segment develops and produces military ammunition; propulsion systems for tactical missiles and missile defense applications; strike weapons; precision weapons and munitions; high-performance gun systems; aircraft survivability systems; fuzes and warheads; propellant and energetic materials; special mission aircraft; airborne missile warning systems; and defense electronics. The Space Systems Group segment offers small-and medium-class satellites that are used to enable global and regional communications and broadcasting; conduct space-related scientific research; and perform activities related to national security. This segment also provides human-rated space systems for Earth-orbit and deep-space exploration, including re-supplying the international space station; and spacecraft components and subsystems, as well as specialized engineering and operations services. Orbital ATK, Inc. is headquartered in Dulles, Virginia.
Embraer Company Profile
Embraer S.A. (Embraer) is a manufacturer of jets of 70 to 130 seats. The Company produces aircraft for commercial and executive aviation, and for defense and security purposes and related services. Its segments include Commercial aviation business, which involves the development, production and sale of commercial jets, and rendering of support services, particularly in the regional aviation segment and aircraft leases; Executive Jet business, which markets its executive jets to companies, including fractional ownership companies, charter and air-taxi companies, high-net-worth individuals and to flight academies; Defense and Security Business segment, which conceives, designs, develops, manufactures and supports a range of integrated solutions for the defense and security market, and Other Related Businesses segment, which provides fuel systems, structural parts, and mechanical and hydraulic systems to Sikorsky Aircraft Corporation for its production of helicopters.
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