Critical Analysis: United Technologies (NYSE:UTX) vs. Heico (HEI)

Critical Analysis: United Technologies (NYSE:UTX) vs. Heico (HEI)

Volatility and Risk

United Technologies (NYSE: UTX) and Heico (NYSE:HEI) are both multi-sector conglomerates companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, dividends, risk, institutional ownership, valuation, analyst recommendations and earnings.

United Technologies has a beta of 1.09, suggesting that its stock price is 9% more volatile than the S&P 500. Comparatively, Heico has a beta of 0.71, suggesting that its stock price is 29% less volatile than the S&P 500.

Earnings and Valuation

This table compares United Technologies and Heico’s top-line revenue, earnings per share and valuation.

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

Profitability

This table compares United Technologies and Heico’s net margins, return on equity and return on assets.

Institutional & Insider Ownership

82.0% of United Technologies shares are owned by institutional investors. Comparatively, 23.4% of Heico shares are owned by institutional investors. 0.2% of United Technologies shares are owned by insiders. Comparatively, 9.9% of Heico shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Dividends

United Technologies pays an annual dividend of $2.80 per share and has a dividend yield of 2.3%. Heico pays an annual dividend of $0.14 per share and has a dividend yield of 0.2%. United Technologies pays out 42.1% of its earnings in the form of a dividend. Heico pays out 8.3% 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. United Technologies has raised its dividend for 6 consecutive years and Heico has raised its dividend for 8 consecutive years.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for United Technologies and Heico, as provided by MarketBeat.com.

United Technologies presently has a consensus target price of $138.25, indicating a potential upside of 13.52%. Heico has a consensus target price of $85.08, indicating a potential downside of 6.84%. Given United Technologies’ stronger consensus rating and higher probable upside, research analysts clearly believe United Technologies is more favorable than Heico.

Summary

United Technologies beats Heico on 10 of the 17 factors compared between the two stocks.

About United Technologies

United Technologies Corporation provides technology products and services to building systems and aerospace industries worldwide. Its Otis segment designs, manufactures, sells, and installs passenger and freight elevators, escalators, and moving walkways; and offers modernization products to upgrade elevators and escalators, as well as maintenance and repair services. The company's UTC Climate, Controls & Security segment provides heating, ventilating, air conditioning, refrigeration, fire, security, and building automation products, solutions, and services for residential, commercial, industrial, and transportation applications. This segment also offers building services, including audit, design, installation, system integration, repair, maintenance, monitoring, and inspection services. Its Pratt & Whitney segment supplies aircraft engines for commercial, military, business jet, and general aviation markets; and provides aftermarket maintenance, repair, and overhaul, as well as fleet management services. The company's UTC Aerospace Systems segment provides electric power generation, power management, and distribution systems; air data and aircraft sensing systems; engine control, intelligence, surveillance, and reconnaissance systems; engine components; environmental control systems; fire and ice detection, and protection systems; propeller systems; engine nacelle systems; aircraft lighting and seating, and cargo systems; actuation and landing systems; space products and subsystems; and aftermarket services. United Technologies Corporation offers its services through manufacturers' representatives, distributors, wholesalers, dealers, retail outlets, and sales representatives, as well as directly to customers. United Technologies Corporation was founded in 1934 and is headquartered in Farmington, Connecticut.

About Heico

HEICO Corporation manufactures Federal Aviation Administration (FAA)-approved jet engine and aircraft component replacement parts, other than the original equipment manufacturers (OEMs) and their subcontractors. The Company also manufactures various types of electronic equipment for the aviation, medical, telecommunications and electronics industries. It operates through two segments: Flight Support Group (FSG) and Electronic Technologies Group (ETG). The FSG segment consists of HEICO Aerospace Holdings Corp. and HEICO Flight Support Corp. and their collective subsidiaries. The FSG segment designs and manufactures jet engine and aircraft component replacement parts. The ETG segment consists of HEICO Electronic Technologies Corp. and its subsidiaries. The ETG segment designs and produces mission-critical subcomponents for various markets, which are utilized in larger systems, including targeting, tracking, identification, testing, communications, telecom and computer systems.

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