Reviewing Leonardo DRS (NASDAQ:DRS) and Loar (NYSE:LOAR)

Loar (NYSE:LOAR) and Leonardo DRS (NASDAQ:DRS) are both mid-cap aerospace companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, analyst recommendations, risk, valuation, institutional ownership, profitability and dividends.

Insider & Institutional Ownership

18.8% of Leonardo DRS shares are owned by institutional investors. 22.6% of Loar shares are owned by company insiders. Comparatively, 0.3% of Leonardo DRS shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Loar and Leonardo DRS”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Loar	$402.82 million	15.67	$22.23 million	$0.66	102.14
Leonardo DRS	$3.23 billion	2.77	$213.00 million	$0.98	34.33

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

Risk and Volatility

Loar has a beta of 0.35, meaning that its stock price is 65% less volatile than the S&P 500. Comparatively, Leonardo DRS has a beta of 0.5, meaning that its stock price is 50% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings for Loar and Leonardo DRS, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Loar	0	1	4	1	3.00
Leonardo DRS	0	3	6	0	2.67

Loar presently has a consensus price target of $90.75, indicating a potential upside of 34.62%. Leonardo DRS has a consensus price target of $46.14, indicating a potential upside of 37.17%. Given Leonardo DRS’s higher probable upside, analysts clearly believe Leonardo DRS is more favorable than Loar.

Profitability

This table compares Loar and Leonardo DRS’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Loar	13.33%	6.45%	4.85%
Leonardo DRS	7.43%	11.37%	7.11%

Summary

Leonardo DRS beats Loar on 9 of the 15 factors compared between the two stocks.

About Loar

Loar Holdings Inc., through its subsidiaries, designs, manufactures, and markets aerospace and defense components for aircraft, and aerospace and defense systems in the United States and internationally. It offers products in various categories, which include airframe components, structural components, avionics, composites, braking system components, de-ice and ice protection, electro-mechanical, engineered materials, flight controls, fluid and motion controls, environmental, metal forming, molded components, and restraints and safety devices. The company also provides auto throttles, lap-belt airbags, two-and three-point seat belts, water purification systems, fire barriers, polyimide washers and bushings, latches, hold-open and tie rods, temperature and fluid sensors and switches, carbon and metallic brake discs, fluid and pneumatic-based ice protection, RAM air components, sealing solutions, actuation devices, and others. It primarily serves commercial, business jet and general aviation, and defense markets. Loar Holdings Inc. was founded in 2017 and is headquartered in White Plains, New York.

About Leonardo DRS

Leonardo DRS, Inc., together with its subsidiaries, provides defense electronic products and systems, and military support services. It operates through Advanced Sensing and Computing (ASC) segment, and Integrated Mission Systems (IMS) segments. The ASC segment designs, develops, and manufacture sensing and network computing technology that enables real-time situational awareness required for enhanced operational decision making and execution; and offers sensing capabilities span applications, such as missions requiring advanced detection, precision targeting and surveillance sensing, long range electro-optic/infrared, signals intelligence, and other intelligence systems including electronic warfare, ground vehicle sensing, active electronically scanned array tactical radars, dismounted soldier, and space sensing. This segment also provides network computing, which are utilized across a range of mission applications including platform computing on ground and shipboard for advanced battle management, combat systems, radar, command and control, tactical networks, tactical computing, and communications. The IMS segment designs, develops, manufacture, and integrates power conversion, control, and distribution systems, ship propulsion systems, motors and variable frequency drives, force protection systems, transportation, and logistics systems for the U.S. and allied defense customers. This segment also offers electrical propulsion systems, which includes power conversion, control, distribution, and propulsion systems, as well as power dense permanent magnet motors, energy storage systems and associated efficient, rugged, and compact power conversion, electrical actuation systems, as well as cooling technologies; and motor controllers, instrumentation and control equipment, electrical actuation systems, and thermal management systems. The company was incorporated in 1968 and is based in Arlington, Virginia. Leonardo DRS, Inc. operates as a subsidiary of Leonardo S.p.A.