Contrasting Leonardo DRS (NASDAQ:DRS) & Saab (OTCMKTS:SAABY)

Saab (OTCMKTS:SAABY) and Leonardo DRS (NASDAQ:DRS) are both aerospace companies, but which is the better stock? We will compare the two companies based on the strength of their dividends, institutional ownership, analyst recommendations, profitability, valuation, earnings and risk.

Dividends

Saab pays an annual dividend of $0.05 per share and has a dividend yield of 0.2%. Leonardo DRS pays an annual dividend of $0.36 per share and has a dividend yield of 1.0%. Saab pays out 8.1% of its earnings in the form of a dividend. Leonardo DRS pays out 36.7% 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.

Earnings & Valuation

This table compares Saab and Leonardo DRS”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Saab	$6.03 billion	4.86	$394.58 million	$0.62	44.15
Leonardo DRS	$3.57 billion	2.65	$213.00 million	$0.98	36.32

Saab has higher revenue and earnings than Leonardo DRS. Leonardo DRS is trading at a lower price-to-earnings ratio than Saab, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

18.8% of Leonardo DRS shares are held by institutional investors. 0.3% of Leonardo DRS shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings for Saab and Leonardo DRS, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Saab	2	1	0	1	2.00
Leonardo DRS	0	3	6	0	2.67

Leonardo DRS has a consensus price target of $47.14, suggesting a potential upside of 32.46%. Given Leonardo DRS’s stronger consensus rating and higher probable upside, analysts clearly believe Leonardo DRS is more favorable than Saab.

Risk and Volatility

Saab has a beta of -0.12, indicating that its share price is 112% less volatile than the S&P 500. Comparatively, Leonardo DRS has a beta of 0.56, indicating that its share price is 44% less volatile than the S&P 500.

Profitability

This table compares Saab and Leonardo DRS’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Saab	7.17%	13.23%	4.94%
Leonardo DRS	7.43%	11.45%	7.16%

Summary

Leonardo DRS beats Saab on 10 of the 17 factors compared between the two stocks.

About Saab

Saab AB (publ) provides products, services, and solutions for military defense, aviation, and civil security markets worldwide. The company operates through Aeronautics, Dynamics, Surveillance, Kockums, and Combitech segments. The company develops military aviation technology, as well as conducts studies on manned and unmanned aircraft. It also provides ground combat weapons, missile systems, torpedoes, unmanned underwater vehicles, training and simulation systems, and signature management systems for armed forces; and niche products for the civil and defense market, such as underwater vehicles for the offshore industry. In addition, the company offers solutions for safety and security, surveillance and decision support, and threat detection, location, and protection, including airborne, ground-based and naval radar, electronic warfare, and combat systems, as well as C4I solutions. Additionally, it provides submarines with the Stirling system for air independent propulsion, surface combatants, mine hunting systems, and autonomous vessels; and systems development, systems integration, information security, systems security, communications, mechanics, and technical product information and logistics. Saab AB (publ) was incorporated in 1937 and is headquartered in Stockholm, Sweden.

About Leonardo DRS

Leonardo DRS, Inc., together with its subsidiaries, provides defense electronic products and systems, and military support services. It operates through Advanced Sensing and Computing (ASC) segment, and Integrated Mission Systems (IMS) segments. The ASC segment designs, develops, and manufacture sensing and network computing technology that enables real-time situational awareness required for enhanced operational decision making and execution; and offers sensing capabilities span applications, such as missions requiring advanced detection, precision targeting and surveillance sensing, long range electro-optic/infrared, signals intelligence, and other intelligence systems including electronic warfare, ground vehicle sensing, active electronically scanned array tactical radars, dismounted soldier, and space sensing. This segment also provides network computing, which are utilized across a range of mission applications including platform computing on ground and shipboard for advanced battle management, combat systems, radar, command and control, tactical networks, tactical computing, and communications. The IMS segment designs, develops, manufacture, and integrates power conversion, control, and distribution systems, ship propulsion systems, motors and variable frequency drives, force protection systems, transportation, and logistics systems for the U.S. and allied defense customers. This segment also offers electrical propulsion systems, which includes power conversion, control, distribution, and propulsion systems, as well as power dense permanent magnet motors, energy storage systems and associated efficient, rugged, and compact power conversion, electrical actuation systems, as well as cooling technologies; and motor controllers, instrumentation and control equipment, electrical actuation systems, and thermal management systems. The company was incorporated in 1968 and is based in Arlington, Virginia. Leonardo DRS, Inc. operates as a subsidiary of Leonardo S.p.A.