Critical Analysis: TAT Technologies (NASDAQ:TATT) vs. Rheinmetall (OTCMKTS:RNMBY)

Rheinmetall (OTCMKTS:RNMBY) and TAT Technologies (NASDAQ:TATT) are both aerospace companies, but which is the better business? We will compare the two companies based on the strength of their profitability, analyst recommendations, dividends, earnings, risk, valuation and institutional ownership.

Institutional & Insider Ownership

15.1% of TAT Technologies shares are owned by institutional investors. 8.8% of TAT Technologies shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and recommmendations for Rheinmetall and TAT Technologies, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rheinmetall	0	1	3	2	3.17
TAT Technologies	1	0	6	0	2.71

TAT Technologies has a consensus target price of $47.80, suggesting a potential upside of 26.59%. Given TAT Technologies’ higher probable upside, analysts plainly believe TAT Technologies is more favorable than Rheinmetall.

Dividends

Rheinmetall pays an annual dividend of $1.25 per share and has a dividend yield of 0.3%. TAT Technologies pays an annual dividend of $0.34 per share and has a dividend yield of 0.9%. Rheinmetall pays out 49.6% of its earnings in the form of a dividend. TAT Technologies pays out 25.6% 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. TAT Technologies is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares Rheinmetall and TAT Technologies”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rheinmetall	$10.55 billion	N/A	$775.87 million	$2.52	152.08
TAT Technologies	$172.53 million	2.75	$11.17 million	$1.33	28.39

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

Risk and Volatility

Rheinmetall has a beta of 0.14, indicating that its stock price is 86% less volatile than the S&P 500. Comparatively, TAT Technologies has a beta of 0.89, indicating that its stock price is 11% less volatile than the S&P 500.

Profitability

This table compares Rheinmetall and TAT Technologies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Rheinmetall	N/A	N/A	N/A
TAT Technologies	9.08%	11.10%	8.12%

Summary

TAT Technologies beats Rheinmetall on 10 of the 16 factors compared between the two stocks.

About Rheinmetall

Rheinmetall AG provides mobility and security technologies worldwide. The company operates in five segments: Vehicle Systems, Weapon and Ammunition, Electronic Solutions, Sensors and Actuators, and Materials and Trade. The Vehicle Systems segment offers combat, logistics, support, and special vehicles, including armored tracked vehicles, CBRN protection systems, artillery, turret systems, and wheeled logistics and tactical vehicles. The Weapon and Ammunition segment provides firepower and protection solutions, such as weapons and munition, protection systems, propellants and international projects and services. The Electronic Solutions segment offers a chain of systems network, such as sensors, networking platforms, automated connected effectors for soldiers, and cyberspace protection solutions, and training and simulation solutions. Its products include air defense systems; soldier systems; command, control, and reconnaissance systems; fire control systems; sensors; and simulations for the army, air force, navy, and civil applications. The Sensors and Actuators segment provides a portfolio of products comprising exhaust gas recirculation systems; throttle valves, control dampers, and exhaust flaps for electromotors; solenoid valves; actuators and valve train systems; oil, water, and vacuum pumps for passenger cars, commercial vehicles, and light and heavy-duty off-road applications; and industrial solutions. The Materials and Trade segment develops system components for the basic motors, such as engine blocks, structural components, and cylinder heads; plain bearings, and bushes; and replacement parts. It also engages in the aftermarket activities. The company was formerly known as Rheinmetall Berlin AG and changed its name to Rheinmetall AG in 1996. Rheinmetall AG was founded in 1889 and is headquartered in Düsseldorf, Germany.

About TAT Technologies

TAT Technologies Ltd., together with its subsidiaries, provides solutions and services to the commercial and military aerospace, and ground defense industries in the United States, Israel, and internationally. The company operates through four segments: Original Equipment Manufacturing (OEM) of Heat Transfer Solutions and Aviation Accessories; Maintenance, Repair, and Overhaul (MRO) Services for Heat Transfer Components and OEM of Heat Transfer Solutions; MRO Services for Aviation Components; and Overhaul and Coating of Jet Engine Components. It designs, develops, and manufactures a range of heat transfer solutions, such as pre-cooler and oil/fuel hydraulic heat exchangers used in mechanical and electronic systems in commercial, military, and business aircraft; environmental control and power electronics cooling systems for use in aircraft and ground applications; and a range of other mechanical aircraft accessories and systems, such as pumps, valves, and turbine power units. The company provides MRO services for heat transfer components, as well as for manufacturing heat transfer solutions; and aviation components. In addition, it engages in the operation of a repair station, which provides heat transfer MRO services for airlines, air cargo carriers, maintenance service centers, and the military; and the overhaul and coating of jet engine components, including turbine vanes and blades, fan blades, variable inlet guide vanes, and afterburner flaps. The company was formerly known as Galagraph Ltd. and changed its name to TAT Technologies Ltd. in May 1992. TAT Technologies Ltd. was founded in 1969 and is headquartered in Netanya, Israel.