Contrasting Transdigm Group (NYSE:TDG) & Optex Systems (NASDAQ:OPXS)

Optex Systems (NASDAQ:OPXS) and Transdigm Group (NYSE:TDG) are both aerospace companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, analyst recommendations, profitability, dividends, earnings and risk.

Risk and Volatility

Optex Systems has a beta of 0.34, suggesting that its share price is 66% less volatile than the S&P 500. Comparatively, Transdigm Group has a beta of 1.07, suggesting that its share price is 7% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Optex Systems	13.01%	24.67%	19.20%
Transdigm Group	20.98%	-35.27%	8.92%

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Optex Systems and Transdigm Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Optex Systems	0	0	0	0	0.00
Transdigm Group	0	4	9	0	2.69

Transdigm Group has a consensus target price of $1,624.6923, indicating a potential upside of 15.48%. Given Transdigm Group’s stronger consensus rating and higher probable upside, analysts clearly believe Transdigm Group is more favorable than Optex Systems.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Optex Systems	$33.99 million	2.11	$3.77 million	$0.75	13.87
Transdigm Group	$7.94 billion	9.99	$1.71 billion	$30.13	46.70

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

Institutional and Insider Ownership

19.1% of Optex Systems shares are held by institutional investors. Comparatively, 95.8% of Transdigm Group shares are held by institutional investors. 30.3% of Optex Systems shares are held by company insiders. Comparatively, 4.1% of Transdigm Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

Transdigm Group beats Optex Systems on 11 of the 14 factors compared between the two stocks.

About Optex Systems

Optex Systems Holdings, Inc manufactures and sells optical sighting systems and assemblies primarily for the U.S. department of defense, foreign military applications, and commercial markets in the United States. It offers periscopes, such as laser and non-laser protected plastic and glass periscopes, electronic M17 day/thermal periscopes, and vision blocks; sighting systems, including back up sights, digital day and night sighting systems, M36 thermal periscope, unity mirrors, optical weapon system support and maintenance, commander weapon station sights, and sight assembly refurbishments; howitzers comprising M137 telescope, M187 mount, M119 aiming device, XM10 and aiming circles; and applied optics center consisting of laser interference filter, optical assemblies, laser filter units, day windows, and specialty thin film coatings, as well as other products, such as muzzle reference systems, binoculars, collimators, optical lenses and elements, and windows. The company also provides various periscope configurations, rifle and surveillance sights, and night vision optical assemblies. Its products are installed on various types of U.S. military land vehicles, such as the Abrams, Bradley, and Stryker families of fighting vehicles, as well as light armored and armored security vehicles. The company offers its products directly to the federal government, prime contractors, and foreign governments. Optex Systems Holdings, Inc was founded in 1987 and is headquartered in Richardson, Texas. Optex Systems Holdings, Inc is a subsidiary of Sileas Corporation.

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.