Comparing United Technologies (UTX) & General Dynamics (GD)

United Technologies (NYSE: UTX) and General Dynamics (NYSE:GD) are both large-cap multi-sector conglomerates companies, but which is the superior business? We will contrast the two businesses based on the strength of their dividends, earnings, analyst recommendations, institutional ownership, risk, profitability and valuation.

Earnings & Valuation

This table compares United Technologies and General Dynamics’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
United Technologies $59.84 billion 1.67 $4.55 billion $5.70 21.93
General Dynamics $30.97 billion 2.07 $2.91 billion $9.55 22.62

United Technologies has higher revenue and earnings than General Dynamics. United Technologies is trading at a lower price-to-earnings ratio than General Dynamics, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

United Technologies has a beta of 1.08, indicating that its share price is 8% more volatile than the S&P 500. Comparatively, General Dynamics has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500.

Dividends

United Technologies pays an annual dividend of $2.80 per share and has a dividend yield of 2.2%. General Dynamics pays an annual dividend of $3.36 per share and has a dividend yield of 1.6%. United Technologies pays out 49.1% of its earnings in the form of a dividend. General Dynamics pays out 35.2% 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. United Technologies has increased its dividend for 20 consecutive years and General Dynamics has increased its dividend for 6 consecutive years. United Technologies is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares United Technologies and General Dynamics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
United Technologies 7.61% 17.35% 5.62%
General Dynamics 9.40% 27.22% 8.86%

Institutional & Insider Ownership

79.9% of United Technologies shares are held by institutional investors. Comparatively, 87.0% of General Dynamics shares are held by institutional investors. 0.2% of United Technologies shares are held by insiders. Comparatively, 6.7% of General Dynamics shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and price targets for United Technologies and General Dynamics, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
United Technologies 0 5 9 0 2.64
General Dynamics 2 4 10 0 2.50

United Technologies presently has a consensus price target of $136.40, indicating a potential upside of 9.13%. General Dynamics has a consensus price target of $234.13, indicating a potential upside of 8.39%. Given United Technologies’ stronger consensus rating and higher possible upside, equities analysts plainly believe United Technologies is more favorable than General Dynamics.

Summary

General Dynamics beats United Technologies on 10 of the 17 factors compared between the two stocks.

About United Technologies

United Technologies Corporation is engaged in providing high technology products and services to the building systems and aerospace industries around the world. The Company operates through four segments: Otis; UTC Climate, Controls & Security; Pratt & Whitney, and UTC Aerospace Systems. Otis operates as an elevator and escalator manufacturing, installation and service company. UTC Climate, Controls & Security segment is engaged in providing heating, ventilating, air conditioning (HVAC) and refrigeration solutions. The Pratt & Whitney segment supplies aircraft engines for the commercial, military, business jet and general aviation markets. Pratt & Whitney segment provides fleet management services and aftermarket maintenance, repair and overhaul services. The UTC Aerospace Systems segment provides aerospace products and aftermarket service solutions for aircraft manufacturers, airlines, regional, business and general aviation markets, military, space and undersea operations.

About General Dynamics

General Dynamics Corporation is a global aerospace and defense company. The Company offers a portfolio of products and services in business aviation; combat vehicles, weapons systems and munitions; information technology (IT) services and C4ISR (command, control, communications, computers, intelligence, surveillance and reconnaissance) solutions, and shipbuilding and ship repair. It operates through four business groups: Aerospace, Combat Systems, Information Systems and Technology, and Marine Systems. Its Aerospace group offers aircraft design; cockpit and cabin systems, and product service and support. Its Combat Systems group offers combat vehicles, weapons systems and munitions. The Information Systems and Technology group provides technologies, products and services in support of various programs. The Marine Systems group is a designer and builder of nuclear-powered submarines, surface combatants and auxiliary and combat-logistics ships.

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