Financial Analysis: Textron (NYSE:TXT) vs. L3Harris Technologies (NYSE:LHX)

L3Harris Technologies (NYSE:LHX) and Textron (NYSE:TXT) are both large-cap aerospace companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, profitability, institutional ownership, dividends and earnings.

Institutional & Insider Ownership

84.8% of L3Harris Technologies shares are held by institutional investors. Comparatively, 86.0% of Textron shares are held by institutional investors. 0.7% of L3Harris Technologies shares are held by company insiders. Comparatively, 1.7% of Textron shares are held by company 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.

Dividends

L3Harris Technologies pays an annual dividend of $4.80 per share and has a dividend yield of 1.4%. Textron pays an annual dividend of $0.08 per share and has a dividend yield of 0.1%. L3Harris Technologies pays out 51.6% of its earnings in the form of a dividend. Textron pays out 1.8% 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. L3Harris Technologies has increased its dividend for 24 consecutive years. L3Harris Technologies is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares L3Harris Technologies and Textron’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
L3Harris Technologies	8.09%	11.08%	5.19%
Textron	5.81%	14.16%	6.10%

Earnings and Valuation

This table compares L3Harris Technologies and Textron”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
L3Harris Technologies	$21.33 billion	2.98	$1.50 billion	$9.31	36.51
Textron	$13.70 billion	1.20	$824.00 million	$4.55	20.54

L3Harris Technologies has higher revenue and earnings than Textron. Textron is trading at a lower price-to-earnings ratio than L3Harris Technologies, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings for L3Harris Technologies and Textron, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
L3Harris Technologies	0	6	14	0	2.70
Textron	0	8	5	0	2.38

L3Harris Technologies presently has a consensus target price of $315.73, suggesting a potential downside of 7.11%. Textron has a consensus target price of $96.33, suggesting a potential upside of 3.10%. Given Textron’s higher possible upside, analysts clearly believe Textron is more favorable than L3Harris Technologies.

Volatility & Risk

L3Harris Technologies has a beta of 0.66, meaning that its share price is 34% less volatile than the S&P 500. Comparatively, Textron has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.

Summary

L3Harris Technologies beats Textron on 10 of the 17 factors compared between the two stocks.

About L3Harris Technologies

L3Harris Technologies, Inc. provides mission-critical solutions for government and commercial customers worldwide. The company's Integrated Mission Systems segment provides intelligence, surveillance, and reconnaissance (ISR) systems, passive sensing and targeting, electronic attack, autonomy, power and communications, and networks and sensors, as well as advanced combat systems for air, land, and sea sectors. Its Space and Airborne Systems segment offers space payloads, sensors, and full-mission solutions; classified intelligence and cyber; mission avionics; electronic warfare systems; and mission networks systems for air traffic management operations. The company's Communication Systems segment provides broadband communications; tactical radios, software, satellite terminals, and end-to-end battlefield systems for the U.S. Department of Defense, international, federal, and state agency customers; integrated vision solutions, including helmet-mounted integrated night vision goggles with leading-edge image intensifier tubes and weapon-mounted sights, aiming lasers, and range finders; and public safety radios, and system applications and equipment. Its Aerojet Rocketdyne segment provides propulsion technologies and armament systems for strategic defense, missile defense, hypersonic, and tactical systems; and space propulsion and power systems for national security, and space and exploration missions. The company was formerly known as Harris Corporation and changed its name to L3Harris Technologies, Inc. in June 2019. L3Harris Technologies, Inc. was founded in 1895 and is based in Melbourne, Florida.

About Textron

Textron Inc. operates in the aircraft, defense, industrial, and finance businesses worldwide. It operates through six segments: Textron Aviation, Bell, Textron Systems, Industrial, Textron eAviation, and Finance. The Textron Aviation segment manufactures, sells, and services business jets, turboprop and piston engine aircraft, and military trainer and defense aircraft; and offers maintenance, inspection, and repair services, as well as sells commercial parts. The Bell segment supplies military and commercial helicopters, tiltrotor aircrafts, and related spare parts and services. The Textron Systems segment offers unmanned aircraft systems, electronic systems and solutions, advanced marine crafts, piston aircraft engines, live military air-to-air and air-to-ship training, weapons and related components, and armored and specialty vehicles. The Industrial segment offers blow-molded solutions, including conventional plastic fuel tanks and pressurized fuel tanks for hybrid vehicle applications, clear-vision systems, plastic tanks for catalytic reduction systems, and battery housing systems for use in electric vehicles primarily to automobile original equipment manufacturers (OEMs); and golf cars, off-road utility vehicles, powersports products, light transportation vehicles, aviation ground support equipment, professional turf-maintenance equipment, and turf-care vehicles to golf courses and resorts, government agencies and municipalities, consumers, outdoor enthusiasts, and commercial and industrial users. The Textron eAviation segment manufactures and sells light aircraft and gliders with electric and combustion engines; and provides other research and development initiatives related to sustainable aviation solutions. The Finance segment offers financing services to purchase new and pre-owned aviation aircraft and Bell helicopters. Textron Inc. was founded in 1923 and is headquartered in Providence, Rhode Island.