Huntington Ingalls Industries (HII) vs. AAR (AIR) Head to Head Review

Huntington Ingalls Industries (NYSE: HII) and AAR (NYSE:AIR) are both aerospace companies, but which is the better stock? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, profitability, dividends, analyst recommendations and valuation.

Profitability

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This table compares Huntington Ingalls Industries and AAR’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Huntington Ingalls Industries 6.44% 31.01% 8.39%
AAR 1.34% 6.02% 3.62%

Valuation & Earnings

This table compares Huntington Ingalls Industries and AAR’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Huntington Ingalls Industries $7.44 billion 1.53 $479.00 million $10.45 24.30
AAR $1.77 billion 0.82 $56.50 million $0.71 59.04

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

Insider and Institutional Ownership

84.1% of Huntington Ingalls Industries shares are owned by institutional investors. Comparatively, 89.4% of AAR shares are owned by institutional investors. 2.2% of Huntington Ingalls Industries shares are owned by insiders. Comparatively, 9.3% of AAR shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Huntington Ingalls Industries pays an annual dividend of $2.88 per share and has a dividend yield of 1.1%. AAR pays an annual dividend of $0.30 per share and has a dividend yield of 0.7%. Huntington Ingalls Industries pays out 27.6% of its earnings in the form of a dividend. AAR pays out 42.3% 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. Huntington Ingalls Industries has increased its dividend for 5 consecutive years. Huntington Ingalls Industries is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Huntington Ingalls Industries and AAR, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Huntington Ingalls Industries 1 2 4 0 2.43
AAR 0 0 5 0 3.00

Huntington Ingalls Industries currently has a consensus price target of $260.71, suggesting a potential upside of 2.65%. AAR has a consensus price target of $47.40, suggesting a potential upside of 13.07%. Given AAR’s stronger consensus rating and higher probable upside, analysts plainly believe AAR is more favorable than Huntington Ingalls Industries.

Volatility & Risk

Huntington Ingalls Industries has a beta of 1.01, suggesting that its stock price is 1% more volatile than the S&P 500. Comparatively, AAR has a beta of 1.26, suggesting that its stock price is 26% more volatile than the S&P 500.

Summary

Huntington Ingalls Industries beats AAR on 10 of the 17 factors compared between the two stocks.

Huntington Ingalls Industries Company Profile

Huntington Ingalls Industries, Inc. is a military shipbuilding company and a provider of professional services to partners in government and industry. The Company’s business consists of the design, construction, repair and maintenance of nuclear-powered ships and non-nuclear ships for the United States Navy and coastal defense surface ships for the United States Coast Guard, as well as the refueling and overhaul and inactivation of nuclear-powered ships for the United States Navy. It operates through three segments: Ingalls Shipbuilding (Ingalls), Newport News Shipbuilding (Newport News) and Technical Solutions. Its Ingalls segment includes its non-nuclear ship design, construction, repair and maintenance businesses. Its Newport News includes all of its nuclear ship design, construction, overhaul, refueling, and repair and maintenance businesses. Its Technical Solutions segment provides a range of professional services to the governmental, energy, and oil and gas markets.

AAR Company Profile

AAR CORP. (AAR) is a provider of services and products to the commercial aviation and government and defense markets. The Company operates in two segments: Aviation Services, which consists of supply chain and maintenance, repair and overhaul (MRO) activities, and Expeditionary Services, which includes airlift and mobility activities. Its services and products include aviation supply chain and parts support programs; MRO of aircraft and landing gear; design and manufacture of specialized pallets, shelters and containers; expeditionary airlift services; aircraft modifications, and aircraft and engine sales and leasing. It serves commercial, defense and governmental aircraft fleet operators, original equipment manufacturers and independent service providers around the world. Its landing gear overhaul facility is in Miami, Florida, where it repairs and overhauls landing gear, brakes and actuators for various types of commercial and military aircraft.

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