L3Harris (NYSE:LHX) and Raytheon (NYSE:RTN) are both large-cap aerospace companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, earnings, analyst recommendations, institutional ownership, profitability, valuation and dividends.
Valuation and Earnings
This table compares L3Harris and Raytheon’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|L3Harris||$6.80 billion||3.66||$949.00 million||$8.29||25.44|
|Raytheon||$27.06 billion||1.83||$2.91 billion||$10.61||16.79|
Raytheon has higher revenue and earnings than L3Harris. Raytheon is trading at a lower price-to-earnings ratio than L3Harris, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
L3Harris has a beta of 0.95, suggesting that its share price is 5% less volatile than the S&P 500. Comparatively, Raytheon has a beta of 0.86, suggesting that its share price is 14% less volatile than the S&P 500.
L3Harris pays an annual dividend of $2.74 per share and has a dividend yield of 1.3%. Raytheon pays an annual dividend of $3.77 per share and has a dividend yield of 2.1%. L3Harris pays out 33.1% of its earnings in the form of a dividend. Raytheon pays out 35.5% 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. Raytheon has raised its dividend for 14 consecutive years. Raytheon is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This is a summary of current ratings and target prices for L3Harris and Raytheon, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
L3Harris presently has a consensus target price of $235.41, suggesting a potential upside of 11.64%. Raytheon has a consensus target price of $210.14, suggesting a potential upside of 17.93%. Given Raytheon’s higher probable upside, analysts plainly believe Raytheon is more favorable than L3Harris.
Insider & Institutional Ownership
94.9% of L3Harris shares are held by institutional investors. Comparatively, 74.7% of Raytheon shares are held by institutional investors. 2.5% of L3Harris shares are held by company insiders. Comparatively, 0.2% of Raytheon shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
This table compares L3Harris and Raytheon’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
L3Harris beats Raytheon on 10 of the 17 factors compared between the two stocks.
L3Harris Company Profile
L3Harris Technologies, Inc. provides technology-based solutions that solve government and commercial customers' mission-critical challenges in the United States and internationally. The company operates in three segments: Communication Systems, Electronic Systems, and Space and Intelligence Systems. It designs, develops, and manufactures radio communications products and systems, including single channel ground and airborne radio systems, multiband manpack and handheld radios, multi-channel manpack and airborne radios, and single-channel airborne radios, as well as wideband rifleman team, ground, and high frequency manpack radios. The company also offers vision-enhancing products; wireless communications systems; and Internet protocol based voice and data communications systems, as well as single-band land mobile radio terminals and multiband radios comprising a handheld radio and a full-spectrum mobile radio for vehicles. In addition, it provides electronic warfare, avionics, command, control, communications, computers, intelligence, surveillance, and reconnaissance solutions for defense and classified customers; and mission-critical communication systems for civil and military aviation and other customers. Further, the company offers intelligence, space protection, geospatial, earth observation, exploration, positioning, navigation and timing, and environmental solutions using advanced sensors, antennas, and payloads, as well as ground processing and information analytics for national security, defense, civil and commercial customers. The company was formerly known as Harris Corporation and changed its name to L3Harris Technologies, Inc. in June 2019. L3Harris Technologies, Inc. was founded in 1895 and is headquartered in Melbourne, Florida.
Raytheon Company Profile
Raytheon Company develops integrated products, services, and solutions for the defense and other government markets worldwide. It operates through five segments: Integrated Defense Systems (IDS); Intelligence, Information and Services (IIS); Missile Systems (MS); Space and Airborne Systems (SAS); and Forcepoint. The IDS segment offers integrated air and missile defense; land- and sea-based radar solutions; command, control, communications, computers, cyber, and intelligence solutions; naval combat and ship electronic and sensing systems; and undersea sensing and effects solutions. The IIS segment provides technical and professional services, such as navigation, DoD space and weather solutions, cybersecurity, analytics, training, logistics, mission support, software-based complex systems, automation and sustainment solutions, and air traffic management systems, as well as intelligence, surveillance, and reconnaissance solutions. The MS segment develops and supports weapon systems comprising missiles, smart munitions, close-in weapon systems, projectiles, kinetic kill vehicles, directed energy effectors, and combat sensor solutions. The SAS segment provides civil and military electro-optical/infrared sensors; airborne radars for surveillance and fire control applications; lasers; precision guidance systems; signals intelligence systems; processors; electronic warfare systems; tactical and strategic communications; and space-qualified systems. The Forcepoint segment offers cyber security products that include risk adaptive data loss prevention; user and entity behavior analytics and cloud access security broker capabilities; insider threat solutions; firewall technology; cloud and on premise Web and email security; and cross domain transfer products. The company was founded in 1922 and is headquartered in Waltham, Massachusetts.
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