Contrasting Heico (NYSE:HEI.A) and Transdigm Group (NYSE:TDG)

Transdigm Group (NYSE:TDG) and Heico (NYSE:HEI.A) are both large-cap aerospace companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, profitability, valuation, dividends, institutional ownership and earnings.

Profitability

This table compares Transdigm Group and Heico’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Transdigm Group	21.69%	-31.91%	9.53%
Heico	15.39%	16.80%	8.36%

Valuation and Earnings

This table compares Transdigm Group and Heico”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Transdigm Group	$8.83 billion	9.25	$2.07 billion	$32.08	45.21
Heico	$4.49 billion	8.45	$690.39 million	$4.57	59.54

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

Volatility & Risk

Transdigm Group has a beta of 0.94, suggesting that its share price is 6% less volatile than the S&P 500. Comparatively, Heico has a beta of 1.08, suggesting that its share price is 8% more volatile than the S&P 500.

Institutional & Insider Ownership

95.8% of Transdigm Group shares are owned by institutional investors. Comparatively, 59.0% of Heico shares are owned by institutional investors. 4.1% of Transdigm Group shares are owned by insiders. Comparatively, 9.8% of Heico shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations for Transdigm Group and Heico, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Transdigm Group	0	4	13	1	2.83
Heico	0	1	0	1	3.00

Transdigm Group currently has a consensus target price of $1,597.00, suggesting a potential upside of 10.11%. Given Transdigm Group’s higher possible upside, research analysts clearly believe Transdigm Group is more favorable than Heico.

Summary

Transdigm Group beats Heico on 9 of the 14 factors compared between the two stocks.

About Transdigm Group

TransDigm Group Incorporated designs, produces, and supplies aircraft components in the United States and internationally. The Power & Control segment offers mechanical/electro-mechanical actuators and controls, ignition systems and engine technology, specialized pumps and valves, power conditioning devices, specialized AC/DC electric motors and generators, batteries and chargers, databus and power controls, sensor products, switches and relay panels, hoists, winches and lifting devices, and cargo loading and handling systems. This segment serves engine and power system and subsystem suppliers, airlines, third party maintenance suppliers, military buying agencies, and repair depots. The Airframe segment provides engineered latching and locking devices, engineered rods, engineered connectors and elastomer sealing solutions, cockpit security components and systems, cockpit displays, engineered audio, radio and antenna systems, lavatory components, seat belts and safety restraints, engineered and customized interior surfaces and related components, thermal protection and insulation products, lighting and control technology, and parachutes. This segment serves airframe manufacturers, cabin system and subsystem suppliers, airlines, third party maintenance suppliers, military buying agencies, and repair depots. The Non-aviation segment offers seat belts and safety restraints for ground transportation applications; electro-mechanical actuators for space applications; hydraulic/electromechanical actuators and fuel valves for land-based gas turbines; refueling systems for heavy equipment used in mining, construction, and other industries; and turbine controls for the energy and oil and gas markets. This segment serves off-road vehicle and subsystem suppliers, child restraint system suppliers, and satellite and space system suppliers; and manufacturers of heavy equipment. TransDigm Group Incorporated was founded in 1993 and is based in Cleveland, Ohio.

About Heico

HEICO Corporation, through its subsidiaries, designs, manufactures, and sells aerospace, defense, and electronic related products and services in the United States and internationally. The company's Flight Support Group segment provides jet engine and aircraft component replacement parts; thermal insulation blankets and parts; renewable/reusable insulation systems; and specialty components. This segment also distributes hydraulic, pneumatic, structural, interconnect, mechanical, and electro-mechanical components for the commercial, regional, and general aviation markets; and offers repair and overhaul services for jet engine and aircraft component parts, avionics, instruments, composites, and flight surfaces of commercial aircraft, as well as for avionics and navigation systems, subcomponents, and other instruments utilized on military aircraft. Its Electronic Technologies Group segment provides electro-optical infrared simulation and test equipment; electro-optical laser products; electro-optical, microwave, and other power equipment; electromagnetic and radio interference shielding and suppression filters; high-speed interface products; high voltage interconnection devices; high voltage advanced power electronics; power conversion products; and underwater locator beacons and emergency locator transmission beacons. This segment also offers traveling wave tube amplifiers and microwave power modules; three-dimensional microelectronic and stacked memory products; harsh environment connectivity products and custom molded cable assemblies; radio frequency and microwave amplifiers, transmitters, and receivers; communications and electronic intercept receivers and tuners; self-sealing auxiliary fuel systems; active antenna systems; and nuclear radiation detectors. The company serves customers primarily in the aviation, defense, space, medical, telecommunications, and electronics industries. HEICO Corporation was founded in 1957 and is headquartered in Hollywood, Florida.