Leonardo DRS (NASDAQ:DRS) and Rheinmetall (OTCMKTS:RNMBY) Critical Contrast

Leonardo DRS (NASDAQ:DRS) and Rheinmetall (OTCMKTS:RNMBY) are both aerospace companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, profitability, valuation, analyst recommendations, institutional ownership, earnings and risk.

Profitability

This table compares Leonardo DRS and Rheinmetall’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Leonardo DRS	7.00%	10.63%	6.67%
Rheinmetall	N/A	N/A	N/A

Valuation & Earnings

This table compares Leonardo DRS and Rheinmetall”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Leonardo DRS	$3.23 billion	3.56	$213.00 million	$0.87	49.70
Rheinmetall	$10.55 billion	N/A	N/A	$0.21	1,830.03

Leonardo DRS has higher earnings, but lower revenue than Rheinmetall. Leonardo DRS is trading at a lower price-to-earnings ratio than Rheinmetall, indicating that it is currently the more affordable of the two stocks.

Dividends

Leonardo DRS pays an annual dividend of $0.36 per share and has a dividend yield of 0.8%. Rheinmetall pays an annual dividend of $1.26 per share and has a dividend yield of 0.3%. Leonardo DRS pays out 41.4% of its earnings in the form of a dividend. Rheinmetall pays out 586.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Leonardo DRS is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of current recommendations for Leonardo DRS and Rheinmetall, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Leonardo DRS	0	2	5	0	2.71
Rheinmetall	0	0	0	2	4.00

Leonardo DRS currently has a consensus price target of $45.86, suggesting a potential upside of 6.05%. Given Leonardo DRS’s higher probable upside, research analysts plainly believe Leonardo DRS is more favorable than Rheinmetall.

Volatility & Risk

Leonardo DRS has a beta of 0.63, meaning that its stock price is 37% less volatile than the S&P 500. Comparatively, Rheinmetall has a beta of 0.34, meaning that its stock price is 66% less volatile than the S&P 500.

Institutional & Insider Ownership

18.8% of Leonardo DRS shares are held by institutional investors. 0.3% of Leonardo DRS 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.

Summary

Leonardo DRS beats Rheinmetall on 11 of the 15 factors compared between the two stocks.

About Leonardo DRS

Leonardo DRS, Inc., together with its subsidiaries, provides defense electronic products and systems, and military support services. It operates through Advanced Sensing and Computing (ASC) segment, and Integrated Mission Systems (IMS) segments. The ASC segment designs, develops, and manufacture sensing and network computing technology that enables real-time situational awareness required for enhanced operational decision making and execution; and offers sensing capabilities span applications, such as missions requiring advanced detection, precision targeting and surveillance sensing, long range electro-optic/infrared, signals intelligence, and other intelligence systems including electronic warfare, ground vehicle sensing, active electronically scanned array tactical radars, dismounted soldier, and space sensing. This segment also provides network computing, which are utilized across a range of mission applications including platform computing on ground and shipboard for advanced battle management, combat systems, radar, command and control, tactical networks, tactical computing, and communications. The IMS segment designs, develops, manufacture, and integrates power conversion, control, and distribution systems, ship propulsion systems, motors and variable frequency drives, force protection systems, transportation, and logistics systems for the U.S. and allied defense customers. This segment also offers electrical propulsion systems, which includes power conversion, control, distribution, and propulsion systems, as well as power dense permanent magnet motors, energy storage systems and associated efficient, rugged, and compact power conversion, electrical actuation systems, as well as cooling technologies; and motor controllers, instrumentation and control equipment, electrical actuation systems, and thermal management systems. The company was incorporated in 1968 and is based in Arlington, Virginia. Leonardo DRS, Inc. operates as a subsidiary of Leonardo S.p.A.

About Rheinmetall

Rheinmetall AG provides mobility and security technologies worldwide. The company operates in five segments: Vehicle Systems, Weapon and Ammunition, Electronic Solutions, Sensors and Actuators, and Materials and Trade. The Vehicle Systems segment offers combat, logistics, support, and special vehicles, including armored tracked vehicles, CBRN protection systems, artillery, turret systems, and wheeled logistics and tactical vehicles. The Weapon and Ammunition segment provides firepower and protection solutions, such as weapons and munition, protection systems, propellants and international projects and services. The Electronic Solutions segment offers a chain of systems network, such as sensors, networking platforms, automated connected effectors for soldiers, and cyberspace protection solutions, and training and simulation solutions. Its products include air defense systems; soldier systems; command, control, and reconnaissance systems; fire control systems; sensors; and simulations for the army, air force, navy, and civil applications. The Sensors and Actuators segment provides a portfolio of products comprising exhaust gas recirculation systems; throttle valves, control dampers, and exhaust flaps for electromotors; solenoid valves; actuators and valve train systems; oil, water, and vacuum pumps for passenger cars, commercial vehicles, and light and heavy-duty off-road applications; and industrial solutions. The Materials and Trade segment develops system components for the basic motors, such as engine blocks, structural components, and cylinder heads; plain bearings, and bushes; and replacement parts. It also engages in the aftermarket activities. The company was formerly known as Rheinmetall Berlin AG and changed its name to Rheinmetall AG in 1996. Rheinmetall AG was founded in 1889 and is headquartered in Düsseldorf, Germany.