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Written by Jake Lerch for The Motley Fool->
Lockheed Martin consistently maintains a larger baseline of revenue than Northrop Grumman.
Both companies display a quarter-over-quarter spike in the fourth quarter followed by a sequential decrease in the first quarter.
Investors should watch whether the revenue gap between the two companies begins to widen or narrow in upcoming quarters.
Lockheed Martin (NYSE:LMT) primarily generates revenue by researching, designing, and manufacturing advanced aerospace and defense systems for the U.S. government.
It recently signed a framework agreement to quadruple the production capacity of specific defense interceptors.
Northrop Grumman (NYSE:NOC) operates globally by developing and producing advanced aircraft, weapons, and mission systems.
It reached an agreement to increase bomber production capacity by 25% while also disclosing an anomaly-related launch charge.
Revenue here refers to the data provider's standardized income statement revenue line item, representing the total money brought in from sales, to help investors measure a company's operational scale.
Lockheed Martin and Northrop Grumman are two of the best-known and most significant defense stocks around. Over the last two years, each company has grown its trailing 12-month revenue by the mid-single digits. Lockheed’s revenue has increased by about 5.7%, and Northrop’s revenue has increased by about 4.0%. For investors pondering an investment in the defense or aerospace sector, both stocks are worthy of consideration.
Let’s start with Lockheed. It is the larger of the two, with a market cap of roughly $117 billion as of this writing. It has a price-to-earnings (P/E) ratio of 25x and a dividend yield of 2.7%. Its key products include the F-35 stealth fighter, the PAC-3 missile defense system, the C-130 Hercules transport aircraft, and the Black Hawk helicopter.
Turning to Northrop, its market cap is about $78 billion as of this writing. Its dividend yield is 1.7%, and its P/E ratio is 17x. Some of Northrop’s key programs include the B-21 stealth bomber, the Sentinel intercontinental ballistic missile, and space systems, including the NASA Artemis mission.
Value-focused investors may prefer Northrop, given its more affordable valuation, while those focused squarely on income may favor Lockheed, given its higher dividend yield.
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Jake Lerch has positions in Lockheed Martin. The Motley Fool recommends Lockheed Martin. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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