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Defense Sector Update: Best Value Today: A Preview

The defense sector has been on a tear lately. After the election of Donald Trump and the promise of doing away with the sequestration multiples are expanding and what looked expensive two weeks ago now looks like a bargain. I want to dig deeper into this when I get time, but for now here is a little preview.

Below is a simple table with some basic metrics on Lockheed Martin (NYSE:LMT), Boeing (NYSE:BA), BAE Systems (OTCPK:BAESY), General Dynamics (NYSE:GD), Raytheon (NYSE:RTN), Northrop Grumman (NYSE:NOC), Huntington Ingalls (NYSE:HII), United Technologies (NYSE:UTX).




12.75 2.89% 17.68%
BA 22.61 7.72 2.94% 21%
BAESY 17.05 22.75 2.99% N/A (UK CO)
GD 17.96 28.25 1.8% 10.17%
RTN 19.79 15.86 1.98% 11.49%
NOC 21.12 13.18 1.45% 11.88%
HII 19.4 8.99 1.37% 3 YR=73.8%
UTX 16.6 11.75 2.43 7.68%

So there it is, simple, down and dirty. If I had to make a snap decision I'd land on LMT or BA based on the P/CFL, solid dividends, and above average dividend growth rate. LMT is more of a pure play but Boeing has the commercial jet market where Airbus (OTCPK:EADSY) is pretty much their only competition today, not a bad industry really.

I'll write a more comprehensive article, hopefully this week, but with the industry moving at breakneck speeds (relative to past price movement), I figured a snapshot would be helpful for some.

Anasazi, this one was for you. I appreciate your comments and always driving the conversation.

Disclosure: I am/we are long RTN, BAESY.