Head-To-Head Analysis: CAE (NYSE:CAE) vs. Huntington Ingalls Industries (NYSE:HII)

Huntington Ingalls Industries (NYSE:HII) and CAE (NYSE:CAE) are both mid-cap aerospace companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, earnings, valuation, analyst recommendations, risk, institutional ownership and dividends.

Analyst Ratings

This is a summary of recent ratings and price targets for Huntington Ingalls Industries and CAE, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Huntington Ingalls Industries	0	4	1	0	2.20
CAE	1	6	1	0	2.00

Huntington Ingalls Industries currently has a consensus target price of $290.00, indicating a potential upside of 14.25%. CAE has a consensus target price of $28.00, indicating a potential upside of 50.78%. Given CAE’s higher probable upside, analysts plainly believe CAE is more favorable than Huntington Ingalls Industries.

Profitability

This table compares Huntington Ingalls Industries and CAE’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Huntington Ingalls Industries	6.35%	18.55%	6.75%
CAE	-7.38%	5.96%	2.64%

Volatility & Risk

Huntington Ingalls Industries has a beta of 0.52, indicating that its share price is 48% less volatile than the S&P 500. Comparatively, CAE has a beta of 1.67, indicating that its share price is 67% more volatile than the S&P 500.

Valuation & Earnings

This table compares Huntington Ingalls Industries and CAE”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Huntington Ingalls Industries	$11.45 billion	0.87	$681.00 million	$18.85	13.47
CAE	$4.34 billion	1.36	-$225.35 million	($0.72)	-25.79

Huntington Ingalls Industries has higher revenue and earnings than CAE. CAE is trading at a lower price-to-earnings ratio than Huntington Ingalls Industries, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

90.5% of Huntington Ingalls Industries shares are held by institutional investors. Comparatively, 67.4% of CAE shares are held by institutional investors. 0.7% of Huntington Ingalls Industries shares are held by company insiders. Comparatively, 18.3% of CAE shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

Huntington Ingalls Industries pays an annual dividend of $5.20 per share and has a dividend yield of 2.0%. CAE pays an annual dividend of $0.33 per share and has a dividend yield of 1.8%. Huntington Ingalls Industries pays out 27.6% of its earnings in the form of a dividend. CAE pays out -45.7% 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. Huntington Ingalls Industries has raised its dividend for 12 consecutive years. Huntington Ingalls Industries is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Huntington Ingalls Industries beats CAE on 11 of the 16 factors compared between the two stocks.

About Huntington Ingalls Industries

Huntington Ingalls Industries, Inc. designs, builds, overhauls, and repairs military ships in the United States. It operates through three segments: Ingalls, Newport News, and Mission Technologies. The company is involved in the design and construction of non-nuclear ships comprising amphibious assault ships; expeditionary warfare ships; surface combatants; and national security cutters for the U.S. Navy and U.S. Coast Guard. It also provides nuclear-powered ships, such as aircraft carriers and submarines, as well as refueling and overhaul, and inactivation services of nuclear-powered aircraft carriers. In addition, the company offers naval nuclear support services, including fleet services comprising design, construction, maintenance, and disposal activities for in-service the U.S. Navy nuclear ships; and maintenance services on nuclear reactor prototypes. Further, the company provides C5ISR systems and operations; application of artificial intelligence and machine learning to battlefield decisions; defensive and offensive cyberspace strategies and electronic warfare; live, virtual, and constructive solutions; unmanned, autonomous systems; and fleet sustainment; and critical nuclear operations. Huntington Ingalls Industries, Inc. was founded in 1886 and is headquartered in Newport News, Virginia.

About CAE

CAE Inc., together with its subsidiaries, provides simulation training and critical operations support solutions in Canada, the United States, the United Kingdom, Europe, Asia, the Oceania, Africa, and Rest of the Americas. It operates through two segments, Civil Aviation; and Defense and Security. The Civil Aviation segment offers training solutions for flight, cabin, maintenance, and ground personnel in commercial, business, and helicopter aviation; a range of flight simulation training devices; and ab initio pilot training and crew sourcing services, as well as aircraft flight operations solutions. The Defense and Security segment operates as a training and simulation provider that delivers platform-independent solutions to enable and enhance force readiness and security for defense forces, original equipment manufacturers (OEMs), government agencies, and public safety organizations. The company was formerly known as CAE Industries Ltd. and changed its name to CAE Inc. in 1993. CAE Inc. was incorporated in 1947 and is headquartered in Saint-Laurent, Canada.