Kaman (NYSE:KAMN) versus Lockheed Martin (NYSE:LMT) Financial Analysis

Kaman (NYSE:KAMN) and Lockheed Martin (NYSE:LMT) are both aerospace companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitability, risk, earnings, dividends, valuation, analyst recommendations and institutional ownership.

Institutional and Insider Ownership

92.0% of Kaman shares are held by institutional investors. Comparatively, 75.7% of Lockheed Martin shares are held by institutional investors. 1.7% of Kaman shares are held by insiders. Comparatively, 0.2% of Lockheed Martin shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent recommendations and price targets for Kaman and Lockheed Martin, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kaman 0 0 1 0 3.00
Lockheed Martin 0 4 6 0 2.60

Kaman presently has a consensus target price of $65.00, suggesting a potential upside of 18.87%. Lockheed Martin has a consensus target price of $421.44, suggesting a potential upside of 8.70%. Given Kaman’s stronger consensus rating and higher possible upside, research analysts clearly believe Kaman is more favorable than Lockheed Martin.

Dividends

Kaman pays an annual dividend of $0.80 per share and has a dividend yield of 1.5%. Lockheed Martin pays an annual dividend of $10.40 per share and has a dividend yield of 2.7%. Kaman pays out 37.9% of its earnings in the form of a dividend. Lockheed Martin pays out 41.9% 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. Kaman has raised its dividend for 1 consecutive years and Lockheed Martin has raised its dividend for 18 consecutive years. Lockheed Martin is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Kaman and Lockheed Martin’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Kaman $784.46 million 1.94 -$69.74 million $2.11 25.91
Lockheed Martin $65.40 billion 1.64 $6.83 billion $24.84 15.57

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

Risk & Volatility

Kaman has a beta of 1.35, meaning that its share price is 35% more volatile than the S&P 500. Comparatively, Lockheed Martin has a beta of 0.99, meaning that its share price is 1% less volatile than the S&P 500.

Profitability

This table compares Kaman and Lockheed Martin’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kaman -8.29% 6.30% 3.52%
Lockheed Martin 10.53% 134.40% 14.03%

Summary

Lockheed Martin beats Kaman on 10 of the 17 factors compared between the two stocks.

About Kaman

Kaman Corporation, together with its subsidiaries, operates in the aerospace, medical, and industrial markets. The company produces and markets aircraft bearings and components; super precision miniature ball bearings; spring energized seals, springs, and contacts; and metallic and composite aero structures for commercial, military, and general aviation fixed and rotary wing aircrafts. It also provides safe and arming solutions for missile and bomb systems for the U.S. and allied militaries; manufactures and supports K-MAX manned and unmanned medium-to-heavy lift helicopters; and restores, modifies, and supports its SH-2G Super Seasprite maritime helicopters. The company operates in North America, Europe, the Middle East, Asia, Oceania, and internationally. Kaman Corporation was incorporated in 1945 and is headquartered in Bloomfield, Connecticut.

About Lockheed Martin

Lockheed Martin Corporation, a security and aerospace company, engages in the research, design, development, manufacture, integration, and sustainment of technology systems, products, and services worldwide. It operates through four segments: Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space. The Aeronautics segment offers combat and air mobility aircraft, unmanned air vehicles, and related technologies. The Missiles and Fire Control segment provides air and missile defense systems; tactical missiles and air-to-ground precision strike weapon systems; logistics; fire control systems; mission operations support, readiness, engineering support, and integration services; manned and unmanned ground vehicles; and energy management solutions. The Rotary and Mission Systems segment offers military and commercial helicopters; ship and submarine mission and combat systems; mission systems and sensors for rotary and fixed-wing aircraft; sea and land-based missile defense systems; radar systems; the Littoral combat ship; simulation and training services; and unmanned systems and technologies. It also supports government customers in cybersecurity; and delivers communications, and command and control capabilities through mission solutions for defense applications. The Space segment offers satellites; space transportation systems; strategic, advanced strike, and defensive missile systems; and classified systems and services in support of national security systems. This segment also provides network-enabled situational awareness and integrates space and ground-based systems to help its customers gather, analyze, and securely distribute critical intelligence data. Lockheed Martin Corporation was founded in 1912 and is headquartered in Bethesda, Maryland.

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