Head-To-Head Comparison: Huntington Ingalls Industries (NYSE:HII) and Textron (NYSE:TXT)

Textron (NYSE:TXT) and Huntington Ingalls Industries (NYSE:HII) are both large-cap industrials companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, valuation, analyst recommendations, profitability, dividends, institutional ownership and risk.

Institutional and Insider Ownership

86.0% of Textron shares are owned by institutional investors. Comparatively, 90.5% of Huntington Ingalls Industries shares are owned by institutional investors. 1.9% of Textron shares are owned by insiders. Comparatively, 0.8% of Huntington Ingalls Industries shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Dividends

Textron pays an annual dividend of $0.08 per share and has a dividend yield of 0.1%. Huntington Ingalls Industries pays an annual dividend of $5.52 per share and has a dividend yield of 1.8%. Textron pays out 1.4% of its earnings in the form of a dividend. Huntington Ingalls Industries pays out 29.7% 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 raised its dividend for 13 consecutive years. Huntington Ingalls Industries is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current ratings for Textron and Huntington Ingalls Industries, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Textron	0	8	4	1	2.46
Huntington Ingalls Industries	0	5	4	1	2.60

Textron presently has a consensus price target of $101.09, indicating a potential upside of 19.46%. Huntington Ingalls Industries has a consensus price target of $366.12, indicating a potential upside of 18.12%. Given Textron’s higher probable upside, equities research analysts plainly believe Textron is more favorable than Huntington Ingalls Industries.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Textron	6.30%	14.34%	6.32%
Huntington Ingalls Industries	5.42%	13.95%	5.76%

Valuation & Earnings

This table compares Textron and Huntington Ingalls Industries”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Textron	$15.45 billion	0.93	$921.00 million	$5.55	15.25
Huntington Ingalls Industries	$12.48 billion	0.98	$605.00 million	$18.58	16.68

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

Volatility and Risk

Textron has a beta of 0.88, meaning that its stock price is 12% less volatile than the S&P 500. Comparatively, Huntington Ingalls Industries has a beta of 0.17, meaning that its stock price is 83% less volatile than the S&P 500.

Summary

Textron beats Huntington Ingalls Industries on 9 of the 16 factors compared between the two stocks.

About Textron

Textron Inc. is a diversified industrial and aerospace company whose businesses design, manufacture and support products for commercial, government and consumer markets. Its operations include aviation, defense and industrial products, with customers in the United States and internationally. Through Textron Aviation, the company produces Cessna and Beechcraft aircraft, including business jets, turboprops and piston-engine aircraft, and provides related maintenance and support services. Its Bell business makes military and commercial helicopters and tiltrotor aircraft, while Textron Systems develops defense and aerospace products such as unmanned aircraft and other mission systems.

About Huntington Ingalls Industries

Huntington Ingalls Industries, Inc. (NYSE: HII) is a U.S. defense contractor focused on shipbuilding and technology services. Its shipyards design, build, and maintain vessels for the U.S. Navy and other government customers, including nuclear-powered aircraft carriers, submarines, destroyers, and amphibious ships. The company operates Newport News Shipbuilding in Virginia and Ingalls Shipbuilding in Mississippi. Newport News is the sole designer and builder of U.S. Navy nuclear-powered aircraft carriers and, alongside General Dynamics Electric Boat, builds the Navy’s nuclear-powered submarines.