Critical Review: General Dynamics (NYSE:GD) and Archer Aviation (NYSE:ACHR)

General Dynamics (NYSE:GD) and Archer Aviation (NYSE:ACHR) are both aerospace companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, risk, valuation, dividends, analyst recommendations, earnings and profitability.

Analyst Recommendations

This is a breakdown of recent ratings for General Dynamics and Archer Aviation, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
General Dynamics	1	11	10	1	2.48
Archer Aviation	1	1	7	0	2.67

General Dynamics currently has a consensus target price of $315.78, indicating a potential downside of 8.14%. Archer Aviation has a consensus target price of $13.43, indicating a potential upside of 16.56%. Given Archer Aviation’s stronger consensus rating and higher possible upside, analysts plainly believe Archer Aviation is more favorable than General Dynamics.

Institutional & Insider Ownership

86.1% of General Dynamics shares are held by institutional investors. Comparatively, 59.3% of Archer Aviation shares are held by institutional investors. 1.5% of General Dynamics shares are held by insiders. Comparatively, 7.7% of Archer Aviation shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Volatility & Risk

General Dynamics has a beta of 0.47, suggesting that its stock price is 53% less volatile than the S&P 500. Comparatively, Archer Aviation has a beta of 3.06, suggesting that its stock price is 206% more volatile than the S&P 500.

Earnings & Valuation

This table compares General Dynamics and Archer Aviation”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
General Dynamics	$47.72 billion	1.94	$3.78 billion	$14.90	23.07
Archer Aviation	N/A	N/A	-$536.80 million	($1.35)	-8.53

General Dynamics has higher revenue and earnings than Archer Aviation. Archer Aviation is trading at a lower price-to-earnings ratio than General Dynamics, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares General Dynamics and Archer Aviation’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
General Dynamics	8.13%	17.99%	7.21%
Archer Aviation	N/A	-62.65%	-51.01%

Summary

General Dynamics beats Archer Aviation on 10 of the 14 factors compared between the two stocks.

About General Dynamics

General Dynamics Corporation operates as an aerospace and defense company worldwide. It operates through four segments: Aerospace, Marine Systems, Combat Systems, and Technologies. The Aerospace segment produces and sells business jets; and offers aircraft maintenance and repair, management, aircraft-on-ground support and completion, charter, staffing, and fixed-base operator services. The Marine Systems segment designs and builds nuclear-powered submarines, surface combatants, and auxiliary ships for the United States Navy and Jones Act ships for commercial customers, as well as builds crude oil and product tankers, and container and cargo ships; provides maintenance, modernization, and lifecycle support services for navy ships; offers and program management, planning, engineering, and design support services for submarine construction programs. The Combat Systems segment manufactures land combat solutions, such as wheeled and tracked combat vehicles, Stryker wheeled combat vehicles, piranha vehicles, weapons systems, munitions, mobile bridge systems with payloads, tactical vehicles, main battle tanks, armored vehicles, and armaments; and offers modernization programs, engineering, support, and sustainment services. The Technologies segment provides information technology solutions and mission support services; mobile communication, computers, and command-and-control mission systems; intelligence, surveillance, and reconnaissance solutions to military, intelligence, and federal civilian customers; cloud computing, artificial intelligence; machine learning; big data analytics; development, security, and operations; and unmanned undersea vehicle manufacturing and assembly services. The company was founded in 1899 and is headquartered in Reston, Virginia.

About Archer Aviation

Archer Aviation Inc., together with its subsidiaries, engages in designs, develops, and operates electric vertical takeoff and landing aircraft for use in urban air mobility. The company was formerly known as Atlas Crest Investment Corp. and changed its name to Archer Aviation Inc. The company is headquartered in San Jose, California.