Critical Survey: Cubic (CUB) & Northrop Grumman (NOC)
Cubic (NYSE: CUB) and Northrop Grumman (NYSE:NOC) are both computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, valuation, analyst recommendations, institutional ownership, earnings, profitability and dividends.
Cubic pays an annual dividend of $0.27 per share and has a dividend yield of 0.4%. Northrop Grumman pays an annual dividend of $4.00 per share and has a dividend yield of 1.3%. Cubic pays out -65.9% of its earnings in the form of a dividend. Northrop Grumman pays out 29.8% 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. Northrop Grumman has increased its dividend for 9 consecutive years. Northrop Grumman is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valuation and Earnings
This table compares Cubic and Northrop Grumman’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Cubic||$1.49 billion||1.11||-$11.20 million||($0.41)||-148.17|
|Northrop Grumman||$24.51 billion||2.11||$2.20 billion||$13.42||22.19|
Northrop Grumman has higher revenue and earnings than Cubic. Cubic is trading at a lower price-to-earnings ratio than Northrop Grumman, indicating that it is currently the more affordable of the two stocks.
This table compares Cubic and Northrop Grumman’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Risk and Volatility
Cubic has a beta of 1.1, meaning that its stock price is 10% more volatile than the S&P 500. Comparatively, Northrop Grumman has a beta of 0.69, meaning that its stock price is 31% less volatile than the S&P 500.
Institutional and Insider Ownership
90.6% of Cubic shares are owned by institutional investors. Comparatively, 81.3% of Northrop Grumman shares are owned by institutional investors. 7.7% of Cubic shares are owned by insiders. Comparatively, 0.7% of Northrop Grumman shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
This is a summary of recent recommendations for Cubic and Northrop Grumman, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Cubic presently has a consensus price target of $60.17, indicating a potential downside of 0.96%. Northrop Grumman has a consensus price target of $296.92, indicating a potential downside of 0.28%. Given Northrop Grumman’s higher probable upside, analysts clearly believe Northrop Grumman is more favorable than Cubic.
Northrop Grumman beats Cubic on 11 of the 16 factors compared between the two stocks.
Cubic Company Profile
Cubic Corporation (Cubic) designs, integrates and operates systems, products and services that provide situational awareness for its customers in the transportation and defense industries. The Company operates in three business segments across the global transportation and defense markets, which include Cubic Transportation Systems (CTS), Cubic Global Defense (CGD) and Cubic Global Defense Services (CGD Services). The Company’s CTS segment is a systems integrator of payment and information technology and services for travel solutions. The Company’s CGD Systems is focused on two primary lines of business: training systems and secure communications (SC) products. The Company’s CGD Services segment is a provider of training, operations, intelligence, maintenance, technical and other support services to the United States government and its agencies and allied nations. It also provides cross-domain hardware solutions to address multi-level security challenges across common networks.
Northrop Grumman Company Profile
Northrop Grumman Corporation is a global security company. The Company provides products, systems and solutions in autonomous systems; cyber; command, control, communications and computers, intelligence, surveillance and reconnaissance (C4ISR); strike, and logistics and modernization. The Company’s segments include Aerospace Systems, Mission Systems and Technology Services. The Company’s Aerospace Systems segment is engaged in the design, development, integration and production of manned aircraft, autonomous systems, spacecraft, high-energy laser systems, microelectronics and other systems/subsystems. The Mission Systems segment offers mission solutions and multifunction systems for Department of Defense (DoD), intelligence community, international, federal civil and commercial customers. The Technology Services segment provides logistics solutions supporting the full life cycle of platforms and systems for global defense and federal-civil customers.
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