Raytheon (RTN) versus Garmin (GRMN) Financial Survey

Raytheon (NYSE: RTN) and Garmin (NASDAQ:GRMN) are both large-cap aerospace companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, dividends, profitability, risk, earnings, analyst recommendations and institutional ownership.

Profitability

This table compares Raytheon and Garmin’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Raytheon 8.40% 22.69% 7.80%
Garmin 18.57% 15.66% 12.02%

Dividends

Raytheon pays an annual dividend of $3.47 per share and has a dividend yield of 1.7%. Garmin pays an annual dividend of $2.04 per share and has a dividend yield of 3.4%. Raytheon pays out 45.5% of its earnings in the form of a dividend. Garmin pays out 69.4% 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. Raytheon has increased its dividend for 13 consecutive years.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Raytheon and Garmin, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Raytheon 0 3 14 0 2.82
Garmin 0 5 2 0 2.29

Raytheon currently has a consensus target price of $221.06, indicating a potential upside of 6.42%. Garmin has a consensus target price of $58.75, indicating a potential downside of 2.84%. Given Raytheon’s stronger consensus rating and higher probable upside, analysts clearly believe Raytheon is more favorable than Garmin.

Insider & Institutional Ownership

72.7% of Raytheon shares are owned by institutional investors. Comparatively, 40.1% of Garmin shares are owned by institutional investors. 0.2% of Raytheon shares are owned by insiders. Comparatively, 17.9% of Garmin shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Raytheon and Garmin’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Raytheon $25.35 billion 2.35 $2.02 billion $7.62 27.26
Garmin $3.09 billion 3.69 $694.95 million $2.94 20.57

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

Risk & Volatility

Raytheon has a beta of 0.7, suggesting that its stock price is 30% less volatile than the S&P 500. Comparatively, Garmin has a beta of 0.98, suggesting that its stock price is 2% less volatile than the S&P 500.

Summary

Raytheon beats Garmin on 11 of the 17 factors compared between the two stocks.

Raytheon Company Profile

Raytheon Company develops integrated products, services, and solutions for defense and other government markets worldwide. It operates through five segments: Integrated Defense Systems (IDS); Intelligence, Information and Services (IIS); Missile Systems (MS); Space and Airborne Systems (SAS); and Forcepoint. The IDS segment provides integrated air and missile defense; land and sea-based radar solutions; command, control, communications, computers, cyber, and intelligence solutions; and naval combat and ship electronic systems. The IIS segment offers a range of technical and professional services, such as intelligence, surveillance and reconnaissance, navigation, DoD space and weather, cybersecurity, analytics, training, logistics, mission support, engineering, and automation and sustainment solutions; and air traffic management systems. The MS segment develops and supports a range of weapon systems, including missiles, smart munitions, close-in weapon systems, projectiles, kinetic kill vehicles, directed energy effectors, and combat sensor solutions. The SAS segment provides electro-optical/infrared sensors, airborne radars for surveillance and fire control applications, lasers, precision guidance systems, signals intelligence systems, processors, electronic warfare systems, and communication and space-qualified systems. The Forcepoint segment develops cyber security products comprising insider threat solutions, data loss prevention, firewall technology, cross domain transfer, and cloud and on premise Web and email security products. The company serves the U.S. Department of Defense, the U.S. Intelligence Community, the U.S. Armed Forces, the Federal Aviation Administration, the National Oceanic and Atmospheric Administration, Department of Homeland Security, the National Aeronautics and Space Administration, and other international customers. Raytheon Company was founded in 1922 and is headquartered in Waltham, Massachusetts.

Garmin Company Profile

Garmin Ltd. designs, develops, manufactures, markets, and distributes a range of navigation, communication, and information devices worldwide. It operates through five segments: Auto, Aviation, Marine, Outdoor, and Fitness. The Auto segment offers personal navigation devices; infotainment systems; and action cameras, as well as mobile applications under the Garmin and NAVIGON names. The Aviation segment provides navigation, communication, flight control, hazard avoidance, weather radar, radar altimeter, datalink weather, in-cockpit and cloud connectivity, voice controls, and other products and services; wearables, portables, apps, training, simulation, and aviation data services; and traffic collision avoidance, engine information, and terrain awareness and warning systems. This segment also offers controller-pilot data link, a suite of automatic dependent surveillance broadcast solutions. The Marine segment provides chartplotters and multi-function displays, Cartography Products, fish finders, sounders, autopilot systems, radars, compliant instrument displays, VHF communication radios, handhelds and wearable devices, sailing products, and entertainment products. The Outdoor segment offers outdoor handhelds, wearable devices, golf devices, and dog tracking and training/pet obedience devices. The Fitness segment provides running/multi-sport watches, cycling computers, cycling power meters, cycling safety and awareness products, and Connect IQ and activity tracking devices, as well as Garmin Connect and Garmin Connect Mobile, which are Web and mobile platforms for users to track and analyze their fitness and wellness data. The company sells its global positioning system receivers and accessories to retail outlets; and aviation products to aviation dealers and aircraft manufacturers through a network of independent dealers and distributors. Garmin Ltd. was founded in 1990 and is based in Schaffhausen, Switzerland.

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