Northrop Grumman vs Raytheon Technologies Which Is a Better Investment?

Northrop Grumman and Raytheon Technologies are two prominent companies in the defense and technology sectors, each with a long history of providing innovative solutions and products to government and commercial clients worldwide. Both companies have demonstrated strong financial performance in recent years, with stable revenue growth and healthy profit margins. Investors looking to capitalize on the growing demand for defense and technology products may find opportunities in the stocks of Northrop Grumman and Raytheon Technologies.

Northrop Grumman or Raytheon Technologies?

When comparing Northrop Grumman and Raytheon Technologies, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Northrop Grumman and Raytheon Technologies.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Northrop Grumman has a dividend yield of 1.67%, while Raytheon Technologies has a dividend yield of 2.14%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Northrop Grumman reports a 5-year dividend growth of 9.33% year and a payout ratio of 49.22%. On the other hand, Raytheon Technologies reports a 5-year dividend growth of -3.93% year and a payout ratio of 67.44%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Northrop Grumman P/E ratio at 29.64 and Raytheon Technologies's P/E ratio at 32.79. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Northrop Grumman P/B ratio is 4.77 while Raytheon Technologies's P/B ratio is 2.53.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Northrop Grumman has seen a 5-year revenue growth of 0.50%, while Raytheon Technologies's is -0.42%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Northrop Grumman's ROE at 16.36% and Raytheon Technologies's ROE at 7.85%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $473.77 for Northrop Grumman and $115.62 for Raytheon Technologies. Over the past year, Northrop Grumman's prices ranged from $418.60 to $555.57, with a yearly change of 32.72%. Raytheon Technologies's prices fluctuated between $79.67 and $128.70, with a yearly change of 61.54%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.