Head to Head Contrast: Kratos Defense & Security Solutions (NASDAQ:KTOS) vs. Transdigm Group (NYSE:TDG)

Kratos Defense & Security Solutions (NASDAQ:KTOS) and Transdigm Group (NYSE:TDG) are both aerospace companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, risk, dividends, analyst recommendations, earnings and valuation.

Profitability

This table compares Kratos Defense & Security Solutions and Transdigm Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kratos Defense & Security Solutions	2.08%	2.82%	2.29%
Transdigm Group	20.24%	-26.49%	9.31%

Earnings and Valuation

This table compares Kratos Defense & Security Solutions and Transdigm Group”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kratos Defense & Security Solutions	$1.35 billion	6.92	$22.00 million	$0.17	292.36
Transdigm Group	$8.83 billion	7.81	$2.07 billion	$32.04	38.51

Transdigm Group has higher revenue and earnings than Kratos Defense & Security Solutions. Transdigm Group is trading at a lower price-to-earnings ratio than Kratos Defense & Security Solutions, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

75.9% of Kratos Defense & Security Solutions shares are held by institutional investors. Comparatively, 95.8% of Transdigm Group shares are held by institutional investors. 1.5% of Kratos Defense & Security Solutions shares are held by insiders. Comparatively, 3.2% of Transdigm Group shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Risk and Volatility

Kratos Defense & Security Solutions has a beta of 1.07, meaning that its share price is 7% more volatile than the S&P 500. Comparatively, Transdigm Group has a beta of 0.9, meaning that its share price is 10% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Kratos Defense & Security Solutions and Transdigm Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kratos Defense & Security Solutions	0	4	16	3	2.96
Transdigm Group	0	10	7	0	2.41

Kratos Defense & Security Solutions currently has a consensus target price of $101.29, indicating a potential upside of 103.80%. Transdigm Group has a consensus target price of $1,477.47, indicating a potential upside of 19.74%. Given Kratos Defense & Security Solutions’ stronger consensus rating and higher possible upside, equities analysts plainly believe Kratos Defense & Security Solutions is more favorable than Transdigm Group.

Summary

Transdigm Group beats Kratos Defense & Security Solutions on 8 of the 15 factors compared between the two stocks.

About Kratos Defense & Security Solutions

Kratos Defense & Security Solutions, Inc. engages in the provision of mission critical products, services and solutions for United States national security priorities. It operates through the Kratos Government Solutions (KGS) and Unmanned Systems (US) segments. The KGS segment consists of an aggregation of KGS operating segments, including microwave electronic products, space, satellite and cyber, training solutions. The US segment refers to the unmanned aerial, unmanned ground, unmanned seaborne and related command, control and communications system businesses. The company was founded on December 19, 1994, and is headquartered in Round Rock, TX.

About Transdigm Group

TransDigm Group Incorporated designs, produces, and supplies aircraft components in the United States and internationally. The 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, batteries and chargers, databus and power controls, sensor products, switches and relay panels, hoists, winches and lifting devices, and cargo loading and handling systems. This segment 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, engineered rods, engineered connectors and elastomer sealing solutions, cockpit security components and systems, cockpit displays, engineered audio, radio and antenna systems, lavatory components, seat belts and safety restraints, engineered and customized interior surfaces and related components, thermal protection and insulation products, lighting and control technology, and parachutes. This segment serves airframe 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; electro-mechanical actuators for space applications; hydraulic/electromechanical actuators and fuel valves for land-based gas turbines; refueling systems for heavy equipment used in mining, construction, and other industries; and turbine controls for the energy and oil and gas markets. This segment serves off-road vehicle and subsystem suppliers, child restraint system suppliers, and satellite and space system suppliers; and manufacturers of heavy equipment. TransDigm Group Incorporated was founded in 1993 and is based in Cleveland, Ohio.