Head to Head Comparison: Embraer-Empresa Brasileira de Aeronautica (NYSE:ERJ) and Lockheed Martin (NYSE:LMT)

Lockheed Martin (NYSE:LMT) and Embraer-Empresa Brasileira de Aeronautica (NYSE:ERJ) are both large-cap aerospace companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, dividends, earnings, valuation, risk, analyst recommendations and institutional ownership.

Risk and Volatility

Lockheed Martin has a beta of 0.25, meaning that its share price is 75% less volatile than the S&P 500. Comparatively, Embraer-Empresa Brasileira de Aeronautica has a beta of 1.82, meaning that its share price is 82% more volatile than the S&P 500.

Dividends

Lockheed Martin pays an annual dividend of $13.80 per share and has a dividend yield of 2.9%. Embraer-Empresa Brasileira de Aeronautica pays an annual dividend of $0.04 per share and has a dividend yield of 0.1%. Lockheed Martin pays out 77.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Embraer-Empresa Brasileira de Aeronautica pays out 2.0% of its earnings in the form of a dividend. Lockheed Martin has raised its dividend for 22 consecutive years. Lockheed Martin is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Lockheed Martin and Embraer-Empresa Brasileira de Aeronautica”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lockheed Martin	$73.35 billion	1.49	$5.34 billion	$17.91	26.35
Embraer-Empresa Brasileira de Aeronautica	$6.93 billion	1.73	$352.50 million	$2.05	31.79

Lockheed Martin has higher revenue and earnings than Embraer-Empresa Brasileira de Aeronautica. Lockheed Martin is trading at a lower price-to-earnings ratio than Embraer-Empresa Brasileira de Aeronautica, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

74.2% of Lockheed Martin shares are owned by institutional investors. Comparatively, 34.7% of Embraer-Empresa Brasileira de Aeronautica shares are owned by institutional investors. 0.1% of Lockheed Martin shares are owned by company insiders. Comparatively, 1.0% of Embraer-Empresa Brasileira de Aeronautica shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Lockheed Martin and Embraer-Empresa Brasileira de Aeronautica’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lockheed Martin	5.73%	111.84%	11.85%
Embraer-Empresa Brasileira de Aeronautica	5.43%	13.38%	3.92%

Analyst Recommendations

This is a breakdown of current ratings and target prices for Lockheed Martin and Embraer-Empresa Brasileira de Aeronautica, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lockheed Martin	1	15	6	1	2.30
Embraer-Empresa Brasileira de Aeronautica	1	2	6	2	2.82

Lockheed Martin presently has a consensus price target of $513.47, indicating a potential upside of 8.79%. Embraer-Empresa Brasileira de Aeronautica has a consensus price target of $63.86, indicating a potential downside of 2.02%. Given Lockheed Martin’s higher possible upside, equities research analysts clearly believe Lockheed Martin is more favorable than Embraer-Empresa Brasileira de Aeronautica.

Summary

Lockheed Martin beats Embraer-Empresa Brasileira de Aeronautica on 10 of the 17 factors compared between the two stocks.

About Lockheed Martin

Lockheed Martin Corporation, a security and aerospace company, engages in the research, design, development, manufacture, integration, and sustainment of technology systems, products, and services worldwide. The company operates through Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space segments. The Aeronautics segment offers combat and air mobility aircraft, unmanned air vehicles, and related technologies. The Missiles and Fire Control segment provides air and missile defense systems; tactical missiles and air-to-ground precision strike weapon systems; logistics; fire control systems; mission operations support, readiness, engineering support, and integration services; manned and unmanned ground vehicles; and energy management solutions. The Rotary and Mission Systems segment offers military and commercial helicopters, surface ships, sea and land-based missile defense systems, radar systems, sea and air-based mission and combat systems, command and control mission solutions, cyber solutions, and simulation and training solutions. The Space segment offers satellites; space transportation systems; strategic, advanced strike, and defensive systems; and classified systems and services in support of national security systems. This segment also provides network-enabled situational awareness and integrates space and ground global systems to help its customers gather, analyze, and securely distribute critical intelligence data. It serves primarily serves the U.S. government, as well as foreign military sales contracted through the U.S. government. The company was founded in 1912 and is based in Bethesda, Maryland.

About Embraer-Empresa Brasileira de Aeronautica

Embraer S.A. designs, develops, manufactures, and sells aircraft and systems in North America, Latin America, the Asia Pacific, Brazil, Europe, and internationally. The company operates through Commercial Aviation; Defense & Security; Executive Aviation; Services & Support; and Other segments. The Commercial Aviation segment designs, develops, manufactures, and sells commercial jets, as well as leases aircraft. The Defense & Security segment engages in the research, development, production, modification, and support for military defense and security aircraft; and offers a range of products and integrated solutions that include radars, special space systems, and cyber security solutions, as well as information and communications systems comprising command, control, communications, computer, intelligence, surveillance, and reconnaissance systems. The Executive Aviation segment develops, produces, and sells executive jets. This segment also leases Phenom family executive jets in the entry jet and light jet categories; and Praetor 500 and Praetor 600, disruptive executive jets in the midsize and super midsize categories. The Service & Support segment provides after-service solutions and support services; maintenance, repair, and overhaul services for commercial, executive, and defense aircraft; and aircraft components and engines. This segment also supplies steel and composite aviation structures to various aircraft manufacturers. The Other segment engages in the supply of fuel systems, structural parts, and mechanical and hydraulic systems; and production of agricultural crop-spraying aircraft. The company was formerly known as Embraer-Empresa Brasileira de Aeronáutica S.A. and changed its name to Embraer S.A. in November 2010. Embraer S.A. was incorporated in 1969 and is headquartered in São Paulo, Brazil.