Analyzing Leonardo DRS (NASDAQ:DRS) & Heico (NYSE:HEI)

Leonardo DRS (NASDAQ:DRS) and Heico (NYSE:HEI) are both industrials companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, analyst recommendations, valuation, profitability, dividends, risk and institutional ownership.

Insider and Institutional Ownership

18.8% of Leonardo DRS shares are held by institutional investors. Comparatively, 27.1% of Heico shares are held by institutional investors. 0.3% of Leonardo DRS shares are held by insiders. Comparatively, 4.9% of Heico shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Dividends

Leonardo DRS pays an annual dividend of $0.36 per share and has a dividend yield of 1.0%. Heico pays an annual dividend of $0.26 per share and has a dividend yield of 0.1%. Leonardo DRS pays out 26.5% of its earnings in the form of a dividend. Heico pays out 4.3% 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. Heico has raised its dividend for 17 consecutive years.

Analyst Ratings

This is a breakdown of recent recommendations for Leonardo DRS and Heico, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Leonardo DRS	0	2	5	3	3.10
Heico	0	7	9	2	2.72

Leonardo DRS presently has a consensus target price of $50.88, indicating a potential upside of 42.33%. Heico has a consensus target price of $387.33, indicating a potential upside of 12.94%. Given Leonardo DRS’s stronger consensus rating and higher possible upside, research analysts clearly believe Leonardo DRS is more favorable than Heico.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Leonardo DRS	9.40%	14.33%	9.29%
Heico	16.38%	18.00%	9.15%

Volatility & Risk

Leonardo DRS has a beta of 0.37, suggesting that its stock price is 63% less volatile than the S&P 500. Comparatively, Heico has a beta of 1.09, suggesting that its stock price is 9% more volatile than the S&P 500.

Valuation & Earnings

This table compares Leonardo DRS 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
Leonardo DRS	$3.88 billion	2.45	$278.00 million	$1.36	26.28
Heico	$5.18 billion	9.26	$690.39 million	$6.01	57.07

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

Summary

Heico beats Leonardo DRS on 13 of the 18 factors compared between the two stocks.

About Leonardo DRS

Leonardo DRS, Inc. is a U.S.-based defense technology company and a subsidiary of the Italian aerospace and defense group Leonardo S.p.A. It develops and supplies advanced products and services for the U.S. military and other government and commercial customers. The company’s offerings include naval power and propulsion systems, combat and mission systems, electro-optical and infrared sensors, electronic warfare and communications equipment, and computing and networking technologies. Its products support operations across maritime, land, air and space domains.

About Heico

HEICO Corporation is an aerospace and electronics company that develops, manufactures and services products for commercial aviation, defense, space and other markets. Its Flight Support Group supplies replacement parts for aircraft and provides repair and overhaul services for aircraft components, while its Electronic Technologies Group makes specialized electronic, electro-optical and other technology products. The company’s products and services support airlines, aircraft operators, original equipment manufacturers, government agencies and defense contractors.