Rocket Lab (NASDAQ:RKLB) and General Dynamics (NYSE:GD) Critical Survey

Rocket Lab (NASDAQ:RKLB) and General Dynamics (NYSE:GD) are both large-cap industrials companies, but which is the better stock? We will contrast the two companies based on the strength of their profitability, valuation, risk, analyst recommendations, institutional ownership, earnings and dividends.

Analyst Recommendations

This is a summary of current ratings and target prices for Rocket Lab and General Dynamics, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rocket Lab	1	5	14	3	2.83
General Dynamics	1	5	12	1	2.68

Rocket Lab presently has a consensus price target of $102.05, suggesting a potential upside of 99.24%. General Dynamics has a consensus price target of $402.32, suggesting a potential upside of 14.85%. Given Rocket Lab’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Rocket Lab is more favorable than General Dynamics.

Valuation and Earnings

This table compares Rocket Lab and General Dynamics”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rocket Lab	$769.15 million	39.85	-$198.21 million	($0.27)	-189.70
General Dynamics	$52.55 billion	1.80	$4.21 billion	$16.39	21.37

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

Profitability

This table compares Rocket Lab and General Dynamics’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Rocket Lab	-21.51%	-6.48%	-4.92%
General Dynamics	8.18%	17.43%	7.67%

Institutional and Insider Ownership

71.8% of Rocket Lab shares are held by institutional investors. Comparatively, 86.1% of General Dynamics shares are held by institutional investors. 8.4% of Rocket Lab shares are held by insiders. Comparatively, 1.4% of General Dynamics shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Volatility and Risk

Rocket Lab has a beta of 2.93, suggesting that its stock price is 193% more volatile than the S&P 500. Comparatively, General Dynamics has a beta of 0.33, suggesting that its stock price is 67% less volatile than the S&P 500.

Summary

General Dynamics beats Rocket Lab on 8 of the 15 factors compared between the two stocks.

About Rocket Lab

Rocket Lab USA, Inc., a space company, provides launch services and space systems solutions for the space and defense industries. The company provides launch services, spacecraft design services, spacecraft components, spacecraft manufacturing, and other spacecraft and on-orbit management solutions; and constellation management services, as well as designs and manufactures small and medium-class rockets. It also designs, manufactures, and sells Electron, a reusable orbital-class small rocket; and the Photon satellite platforms, as well as developing the Neutron 8-ton payload class launch vehicle; conducts remote launch activities; and designs and manufactures a range of components and subsystems for the Photon family of spacecraft and broader merchant spacecraft components. The company serves commercial, aerospace prime contractors, and government customers. Rocket Lab USA, Inc. was founded in 2006 and is headquartered in Long Beach, California.

About General Dynamics

General Dynamics Corporation operates as an aerospace and defense company worldwide. It operates through four segments: Aerospace, Marine Systems, Combat Systems, and Technologies. The Aerospace segment produces and sells business jets; and offers aircraft maintenance and repair, management, aircraft-on-ground support and completion, charter, staffing, and fixed-base operator services. The Marine Systems segment designs and builds nuclear-powered submarines, surface combatants, and auxiliary ships for the United States Navy and Jones Act ships for commercial customers, as well as builds crude oil and product tankers, and container and cargo ships; provides maintenance, modernization, and lifecycle support services for navy ships; offers and program management, planning, engineering, and design support services for submarine construction programs. The Combat Systems segment manufactures land combat solutions, such as wheeled and tracked combat vehicles, Stryker wheeled combat vehicles, piranha vehicles, weapons systems, munitions, mobile bridge systems with payloads, tactical vehicles, main battle tanks, armored vehicles, and armaments; and offers modernization programs, engineering, support, and sustainment services. The Technologies segment provides information technology solutions and mission support services; mobile communication, computers, and command-and-control mission systems; intelligence, surveillance, and reconnaissance solutions to military, intelligence, and federal civilian customers; cloud computing, artificial intelligence; machine learning; big data analytics; development, security, and operations; and unmanned undersea vehicle manufacturing and assembly services. The company was founded in 1899 and is headquartered in Reston, Virginia.