Kratos Defense & Security Solutions (NASDAQ:KTOS – Get Free Report) and Transdigm Group (NYSE:TDG – Get Free Report) are both aerospace companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, dividends, analyst recommendations, risk, profitability, institutional ownership and earnings.
Volatility and Risk
Kratos Defense & Security Solutions has a beta of 1.07, suggesting that its share price is 7% more volatile than the S&P 500. Comparatively, Transdigm Group has a beta of 0.9, suggesting that its share price is 10% less volatile than the S&P 500.
Valuation & Earnings
This table compares Kratos Defense & Security Solutions 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 | |
| Kratos Defense & Security Solutions | $1.35 billion | 6.92 | $22.00 million | $0.17 | 292.36 |
| Transdigm Group | $8.83 billion | 7.81 | $2.07 billion | $32.04 | 38.51 |
Transdigm Group has higher revenue and earnings than Kratos Defense & Security Solutions. Transdigm Group is trading at a lower price-to-earnings ratio than Kratos Defense & Security Solutions, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a breakdown of current recommendations and price targets for Kratos Defense & Security Solutions and Transdigm Group, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Kratos Defense & Security Solutions | 0 | 4 | 16 | 3 | 2.96 |
| Transdigm Group | 0 | 10 | 7 | 0 | 2.41 |
Kratos Defense & Security Solutions currently has a consensus target price of $101.29, suggesting a potential upside of 103.80%. Transdigm Group has a consensus target price of $1,477.47, suggesting a potential upside of 19.74%. Given Kratos Defense & Security Solutions’ stronger consensus rating and higher probable upside, research analysts clearly believe Kratos Defense & Security Solutions is more favorable than Transdigm Group.
Profitability
This table compares Kratos Defense & Security Solutions and Transdigm Group’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Kratos Defense & Security Solutions | 2.08% | 2.82% | 2.29% |
| Transdigm Group | 20.24% | -26.49% | 9.31% |
Insider and Institutional Ownership
75.9% of Kratos Defense & Security Solutions shares are owned by institutional investors. Comparatively, 95.8% of Transdigm Group shares are owned by institutional investors. 1.5% of Kratos Defense & Security Solutions shares are owned by insiders. Comparatively, 3.2% of Transdigm Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Summary
Transdigm Group beats Kratos Defense & Security Solutions on 8 of the 15 factors compared between the two stocks.
About Kratos Defense & Security Solutions
Kratos Defense & Security Solutions, Inc. engages in the provision of mission critical products, services and solutions for United States national security priorities. It operates through the Kratos Government Solutions (KGS) and Unmanned Systems (US) segments. The KGS segment consists of an aggregation of KGS operating segments, including microwave electronic products, space, satellite and cyber, training solutions. The US segment refers to the unmanned aerial, unmanned ground, unmanned seaborne and related command, control and communications system businesses. The company was founded on December 19, 1994, and is headquartered in Round Rock, TX.
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.
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