Honeywell International (NYSE:HON) and Northrop Grumman (NYSE:NOC) are both large-cap multi-sector conglomerates companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, institutional ownership, analyst recommendations, dividends, valuation, earnings and profitability.
Institutional and Insider Ownership
76.0% of Honeywell International shares are owned by institutional investors. Comparatively, 82.7% of Northrop Grumman shares are owned by institutional investors. 0.6% of Honeywell International shares are owned by insiders. Comparatively, 0.3% of Northrop Grumman shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Risk & Volatility
Honeywell International has a beta of 1.13, indicating that its stock price is 13% more volatile than the S&P 500. Comparatively, Northrop Grumman has a beta of 0.75, indicating that its stock price is 25% less volatile than the S&P 500.
Dividends
Honeywell International pays an annual dividend of $3.72 per share and has a dividend yield of 1.6%. Northrop Grumman pays an annual dividend of $5.80 per share and has a dividend yield of 1.7%. Honeywell International pays out 45.6% of its earnings in the form of a dividend. Northrop Grumman pays out 27.3% 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. Honeywell International has increased its dividend for 10 consecutive years and Northrop Grumman has increased its dividend for 13 consecutive years. Northrop Grumman is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings and Valuation
This table compares Honeywell International and Northrop Grumman's gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
Honeywell International | $36.71 billion | 4.40 | $6.14 billion | $8.16 | 28.44 |
Northrop Grumman | $33.84 billion | 1.65 | $2.25 billion | $21.21 | 16.33 |
Honeywell International has higher revenue and earnings than Northrop Grumman. Northrop Grumman is trading at a lower price-to-earnings ratio than Honeywell International, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Honeywell International and Northrop Grumman's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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Honeywell International | 14.99% | 27.69% | 8.34% |
Northrop Grumman | 6.94% | 40.02% | 8.83% |
Analyst Ratings
This is a summary of recent ratings and recommmendations for Honeywell International and Northrop Grumman, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
Honeywell International | 0 | 7 | 9 | 0 | 2.56 |
Northrop Grumman | 0 | 2 | 9 | 0 | 2.82 |
Honeywell International currently has a consensus price target of $213.1429, indicating a potential downside of 8.17%. Northrop Grumman has a consensus price target of $377.9091, indicating a potential upside of 9.09%. Given Northrop Grumman's stronger consensus rating and higher probable upside, analysts clearly believe Northrop Grumman is more favorable than Honeywell International.
Summary
Northrop Grumman beats Honeywell International on 9 of the 16 factors compared between the two stocks.