Critical Comparison: Rheinmetall (OTCMKTS:RNMBY) versus Saab (OTCMKTS:SAABY)

Rheinmetall (OTCMKTS:RNMBY) and Saab (OTCMKTS:SAABY) are both large-cap aerospace companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, profitability, risk, institutional ownership, earnings, dividends and analyst recommendations.

Analyst Recommendations

This is a summary of current ratings and target prices for Rheinmetall and Saab, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rheinmetall	0	1	7	1	3.00
Saab	1	2	0	0	1.67

Dividends

Rheinmetall pays an annual dividend of $1.89 per share and has a dividend yield of 0.6%. Saab pays an annual dividend of $0.06 per share and has a dividend yield of 0.2%. Rheinmetall pays out 88.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Saab pays out 7.7% of its earnings in the form of a dividend.

Valuation and Earnings

This table compares Rheinmetall and Saab”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rheinmetall	$11.24 billion	6.22	$787.45 million	$2.13	140.96
Saab	$8.42 billion	3.93	$645.29 million	$0.78	39.60

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Rheinmetall	7.08%	21.40%	7.13%
Saab	7.87%	15.43%	5.65%

Volatility & Risk

Rheinmetall has a beta of 0.16, meaning that its share price is 84% less volatile than the S&P 500. Comparatively, Saab has a beta of -0.14, meaning that its share price is 114% less volatile than the S&P 500.

Summary

Rheinmetall beats Saab on 12 of the 14 factors compared between the two stocks.

About Rheinmetall

Rheinmetall AG provides mobility and security technologies worldwide. The company operates in five segments: Vehicle Systems, Weapon and Ammunition, Electronic Solutions, Sensors and Actuators, and Materials and Trade. The Vehicle Systems segment offers combat, logistics, support, and special vehicles, including armored tracked vehicles, CBRN protection systems, artillery, turret systems, and wheeled logistics and tactical vehicles. The Weapon and Ammunition segment provides firepower and protection solutions, such as weapons and munition, protection systems, propellants and international projects and services. The Electronic Solutions segment offers a chain of systems network, such as sensors, networking platforms, automated connected effectors for soldiers, and cyberspace protection solutions, and training and simulation solutions. Its products include air defense systems; soldier systems; command, control, and reconnaissance systems; fire control systems; sensors; and simulations for the army, air force, navy, and civil applications. The Sensors and Actuators segment provides a portfolio of products comprising exhaust gas recirculation systems; throttle valves, control dampers, and exhaust flaps for electromotors; solenoid valves; actuators and valve train systems; oil, water, and vacuum pumps for passenger cars, commercial vehicles, and light and heavy-duty off-road applications; and industrial solutions. The Materials and Trade segment develops system components for the basic motors, such as engine blocks, structural components, and cylinder heads; plain bearings, and bushes; and replacement parts. It also engages in the aftermarket activities. The company was formerly known as Rheinmetall Berlin AG and changed its name to Rheinmetall AG in 1996. Rheinmetall AG was founded in 1889 and is headquartered in Düsseldorf, Germany.

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.