Financial Survey: Saab (OTCMKTS:SAABY) vs. AAR (NYSE:AIR)

Saab (OTCMKTS:SAABY – Get Free Report) and AAR (NYSE:AIR – Get Free Report) are both aerospace companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, dividends, analyst recommendations, valuation, profitability, risk and institutional ownership.

Volatility and Risk

Saab has a beta of -0.18, meaning that its share price is 118% less volatile than the S&P 500. Comparatively, AAR has a beta of 1.29, meaning that its share price is 29% more volatile than the S&P 500.

Insider & Institutional Ownership

90.7% of AAR shares are owned by institutional investors. 3.6% of AAR shares are owned by company 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.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Saab and AAR, as provided by MarketBeat.

AAR has a consensus target price of $91.00, suggesting a potential upside of 8.85%. Given AAR’s stronger consensus rating and higher probable upside, analysts plainly believe AAR is more favorable than Saab.

Dividends

Saab pays an annual dividend of $0.05 per share and has a dividend yield of 0.2%. AAR pays an annual dividend of $0.30 per share and has a dividend yield of 0.4%. Saab pays out 8.1% of its earnings in the form of a dividend. AAR pays out 38.5% 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.

Profitability

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

Earnings and Valuation

This table compares Saab and AAR”s gross revenue, earnings per share and valuation.

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

Summary

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

About Saab

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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 AAR

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AAR Corp. provides products and services to commercial aviation, government, and defense markets worldwide. The Parts Supply segment leases and sells aircraft components and replacement parts. The Repair & Engineering segment provides airframe maintenance services, such as airframe inspection, painting, line maintenance, airframe modification, structural repair, avionics service and installation, exterior and interior refurbishment, and engineering and support services; component repair services comprising maintenance, repair, and overhaul (MRO) services, engine and airframe accessories, and interior refurbishment; and landing gear overhaul services, including repair services on wheels and brakes. This segment also develops specific aircraft components and parts; and designs proprietary designated engineering representative repairs. The Integrated Solutions segment engages in the fleet management and operation of customer-owned aircraft; provision of supply chain logistics services, such as material planning, sourcing, logistics, information and program management, and parts and component repair and overhaul services; and flight hour component inventory and repair services. In addition, the segment provides integrated software solutions comprising Trax, a cloud-based electronic enterprise resource platform, as well as a suite of paperless mobility apps for automating MRO workflows. The Expeditionary Services segment designs, manufactures, and repairs transportation pallets; and containers and shelters for military and humanitarian tactical deployment activities, including armories, supply and parts storage, refrigeration systems, tactical operation centers, briefing rooms, laundry and kitchen facilities, water treatment, and sleeping quarters, as well as engages in provision of engineering, design, and system integration services for specialized command and control systems. AAR Corp. was founded in 1951 and is headquartered in Wood Dale, Illinois.