Analyzing Textron (NYSE:TXT) and Kratos Defense & Security Solutions (NASDAQ:KTOS)

Kratos Defense & Security Solutions (NASDAQ:KTOS) and Textron (NYSE:TXT) are both industrials companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, analyst recommendations, valuation, risk and profitability.

Institutional & Insider Ownership

75.9% of Kratos Defense & Security Solutions shares are held by institutional investors. Comparatively, 86.0% of Textron shares are held by institutional investors. 1.5% of Kratos Defense & Security Solutions shares are held by company insiders. Comparatively, 1.9% of Textron shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Kratos Defense & Security Solutions	2.03%	3.07%	2.55%
Textron	6.12%	14.30%	6.26%

Volatility and Risk

Kratos Defense & Security Solutions has a beta of 1.11, indicating that its stock price is 11% more volatile than the S&P 500. Comparatively, Textron has a beta of 0.91, indicating that its stock price is 9% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations for Kratos Defense & Security Solutions and Textron, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kratos Defense & Security Solutions	1	2	17	2	2.91
Textron	0	7	2	1	2.40

Kratos Defense & Security Solutions presently has a consensus price target of $96.53, suggesting a potential upside of 124.12%. Textron has a consensus price target of $102.44, suggesting a potential upside of 32.57%. Given Kratos Defense & Security Solutions’ stronger consensus rating and higher probable upside, analysts plainly believe Kratos Defense & Security Solutions is more favorable than Textron.

Valuation & Earnings

This table compares Kratos Defense & Security Solutions and Textron”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kratos Defense & Security Solutions	$1.52 billion	5.31	$22.00 million	$0.17	253.35
Textron	$15.30 billion	0.87	$921.00 million	$5.30	14.58

Textron has higher revenue and earnings than Kratos Defense & Security Solutions. Textron 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.

Summary

Textron 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 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.