Financial Survey: TransDigm Group (TDG) versus Elbit Systems (ESLT)

TransDigm Group (NYSE: TDG) and Elbit Systems (NASDAQ:ESLT) are both aerospace companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, risk, valuation, dividends, earnings, profitability and institutional ownership.

Dividends

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Elbit Systems pays an annual dividend of $1.76 per share and has a dividend yield of 1.5%. TransDigm Group does not pay a dividend. Elbit Systems pays out 27.5% of its earnings in the form of a dividend.

Volatility and Risk

TransDigm Group has a beta of 0.77, suggesting that its share price is 23% less volatile than the S&P 500. Comparatively, Elbit Systems has a beta of 0.88, suggesting that its share price is 12% less volatile than the S&P 500.

Valuation & Earnings

This table compares TransDigm Group and Elbit Systems’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
TransDigm Group $3.50 billion 4.57 $596.88 million $12.01 25.57
Elbit Systems $3.38 billion 1.47 $239.10 million $6.41 18.17

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

Institutional & Insider Ownership

11.8% of Elbit Systems shares are owned by institutional investors. 11.5% of TransDigm Group shares are owned by insiders. Comparatively, 0.8% of Elbit Systems shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares TransDigm Group and Elbit Systems’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TransDigm Group 18.95% -27.70% 6.47%
Elbit Systems 7.08% 16.45% 5.94%

Analyst Recommendations

This is a breakdown of recent ratings and target prices for TransDigm Group and Elbit Systems, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TransDigm Group 1 4 10 0 2.60
Elbit Systems 0 2 0 0 2.00

TransDigm Group presently has a consensus price target of $324.00, suggesting a potential upside of 5.51%. Elbit Systems has a consensus price target of $110.00, suggesting a potential downside of 5.58%. Given TransDigm Group’s stronger consensus rating and higher possible upside, equities analysts clearly believe TransDigm Group is more favorable than Elbit Systems.

Summary

TransDigm Group beats Elbit Systems on 12 of the 16 factors compared between the two stocks.

TransDigm Group Company Profile

TransDigm Group Incorporated designs, produces, and supplies aircraft components in the United States. The company's Power & Control segment offers mechanical/electro-mechanical actuators and controls, ignition systems and engine technology, specialized pumps and valves, power conditioning devices, specialized AC/DC electric motors and generators, databus and power controls, hoists, winches and lifting devices, and cargo loading and handling systems. It serves engine and power system and subsystem suppliers, airlines, third party maintenance suppliers, military buying agencies, and repair depots. The Airframe segment provides engineered latching and locking devices, rods and locking devices, engineered connectors and elastomers, cockpit security components and systems, aircraft audio systems, specialized lavatory components, seat belts and safety restraints, engineered interior surfaces and related components, lighting and control technology, military personnel parachutes, and cargo delivery systems. It serves manufacturers, cabin system and subsystem suppliers, airlines, third party maintenance suppliers, military buying agencies, and repair depots. The Non-aviation segment offers seat belts and safety restraints for ground transportation applications; mechanical/electro-mechanical actuators and controls for space applications; and refueling systems for heavy equipment. It serves off-road vehicle and subsystem suppliers, child restraint system suppliers, and satellite and space system suppliers; and manufacturers of heavy equipment. The company also offers aerospace pneumatic and hydraulic components and subsystems for commercial transport, regional, business jet, and military applications; extruded plastic interior parts for use in the commercial aerospace industry; faucets and related products for use on commercial transports and regional jets; and unit load devices. TransDigm Group Incorporated was founded in 1993 and is headquartered in Cleveland, Ohio.

Elbit Systems Company Profile

Elbit Systems Ltd. develops and supplies a range of airborne, land, and naval systems and products for defense, homeland security, and commercial aviation applications worldwide. The company offers military aircraft and helicopter systems; commercial aviation systems and aero structures; unmanned aircraft systems and unmanned surface vessels; electro-optic and countermeasures systems; land vehicle systems; command, control, communications, computer, and intelligence systems; electronic warfare and signal intelligence systems; and commercial cyber security products. It also provides medical diagnostic equipment, automotive night vision enhancement equipment, and smart glasses for sports applications; and super capacitor energy sources and fuel cells for transportation applications, as well as a range of support services. The company markets its systems and products as a prime contractor or subcontractor to various government and defense and homeland security contractors. Elbit Systems Ltd. was founded in 1966 and is based in Haifa, Israel.

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