Contrasting W.W. Grainger (NYSE:GWW) & Aercap (NYSE:AER)

Aercap (NYSE:AER) and W.W. Grainger (NYSE:GWW) are both large-cap industrials companies, but which is the superior stock? We will contrast the two companies based on the strength of their institutional ownership, dividends, analyst recommendations, profitability, risk, valuation and earnings.

Earnings and Valuation

This table compares Aercap and W.W. Grainger”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Aercap	$8.52 billion	2.86	$3.75 billion	$20.32	7.19
W.W. Grainger	$17.94 billion	3.44	$1.71 billion	$39.22	33.46

Aercap has higher earnings, but lower revenue than W.W. Grainger. Aercap is trading at a lower price-to-earnings ratio than W.W. Grainger, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Aercap and W.W. Grainger’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Aercap	37.85%	17.60%	4.51%
W.W. Grainger	9.92%	48.73%	22.40%

Risk and Volatility

Aercap has a beta of 0.93, indicating that its stock price is 7% less volatile than the S&P 500. Comparatively, W.W. Grainger has a beta of 1.04, indicating that its stock price is 4% more volatile than the S&P 500.

Institutional and Insider Ownership

96.4% of Aercap shares are held by institutional investors. Comparatively, 80.7% of W.W. Grainger shares are held by institutional investors. 0.5% of Aercap shares are held by company insiders. Comparatively, 6.3% of W.W. Grainger shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Dividends

Aercap pays an annual dividend of $1.60 per share and has a dividend yield of 1.1%. W.W. Grainger pays an annual dividend of $9.96 per share and has a dividend yield of 0.8%. Aercap pays out 7.9% of its earnings in the form of a dividend. W.W. Grainger pays out 25.4% 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. Aercap has increased its dividend for 2 consecutive years and W.W. Grainger has increased its dividend for 55 consecutive years. Aercap is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of current ratings and target prices for Aercap and W.W. Grainger, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Aercap	0	1	9	1	3.00
W.W. Grainger	1	7	2	0	2.10

Aercap presently has a consensus price target of $172.56, indicating a potential upside of 18.05%. W.W. Grainger has a consensus price target of $1,274.12, indicating a potential downside of 2.90%. Given Aercap’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Aercap is more favorable than W.W. Grainger.

About Aercap

AerCap Holdings N.V. engages in the lease, financing, sale, and management of commercial flight equipment in China, Hong Kong, Macau, the United States, Ireland, and internationally. The company offers aircraft asset management services, such as remarketing aircraft and engines; collecting rental and maintenance rent payments, monitoring aircraft maintenance, monitoring and enforcing contract compliance, and accepting delivery and redelivery of aircraft and engines; and conducting ongoing lessee financial performance reviews. Its aircraft asset management services also include periodically inspecting the leased aircraft and engines; coordinating technical modifications to aircraft to meet new lessee requirements; conducting restructuring negotiations in connection with lease defaults; repossessing aircraft and engines; arranging and monitoring insurance coverage; registering and de-registering aircraft; arranging for aircraft and engine valuations; and providing market research services. In addition, the company provides cash management services, including treasury services, such as the financing, refinancing, hedging, and ongoing cash management of vehicles; and administrative services comprising accounting and corporate secretarial services consisting of the preparation of budgets and financial statements. Further, it offers airframe and engine parts and supply chain solutions to airlines; maintenance, repair, and overhaul service providers; and aircraft parts distributors. The company had a portfolio of owned, managed, or on order aircraft. AerCap Holdings N.V. was founded in 1995 and is headquartered in Dublin, Ireland.

About W.W. Grainger

W.W. Grainger, Inc., together with its subsidiaries, distributes maintenance, repair, and operating products and services primarily in North America, Japan, the United Kingdom, and internationally. The company operates through two segments, High-Touch Solutions N.A. and Endless Assortment. The company provides safety, security, material handling and storage equipment, pumps and plumbing equipment, cleaning and maintenance, and metalworking and hand tools. It also offers technical support and inventory management services. The company serves smaller businesses to large corporations, government entities, and other institutions, as well as commercial, healthcare, and manufacturing industries through sales and service representatives, and electronic and ecommerce channels. W.W. Grainger, Inc. was founded in 1927 and is headquartered in Lake Forest, Illinois.