2
J.P. Morgan Aero/Def Comp Sheet
Source: Bloomberg, J.P. Morgan. Note: Prices as of October 11, 2019.
Shares Mark et EP S P/E EV/ EB ITDA EV/ Sales P/FCF Price Implied
Arconic $26.45 ARNC OW 445.3 11.8 1.34 2.05 2.45 19.8x 12.9x 10.8x 7.0x 6.5x 1.1x 1.1x 15.9x 14.5x $30 13%
Boeing $374.92 BA OW 564.7 211.7 16.06 2.65 20.30 23.3x NM 18.5x 44.9x 12.4x 2.8x 1.9x NM 12.3x $425 13%
Bombardier C$ 1.57 BBD/B CT N 2901.5 3.4 0.13 (0.07) 0.04 9.5x NM NM 5.6x 6.4x 0.6x 0.6x NM 11.4x na na
Kaman Corp $58.24 KAMN UW 28.1 1.6 2.88 1.90 2.30 20.3x 30.6x 25.3x 17.9x 16.1x 1.8x 2.4x 28.5x 27.6x $63 8%
Spirit A eroSystems $83.50 SPR N 104.5 8.7 6.24 6.95 8.10 13.4x 12.0x 10.3x 8.0x 7.1x 1.2x 1.1x 12.7x 12.4x $100 20%
Textron $48.86 TXT OW 233.5 11.4 3.35 3.80 4.10 14.6x 12.9x 11.9x 8.6x 8.4x 1.1x 1.0x 15.7x 14.8x $58 19%
TransDigm $524.78 TDG UW 56.3 29.5 16.07 19.90 22.72 32.6x 26.4x 23.1x 18.6x 15.5x 7.3x 7.0x 23.0x 23.6x $590 12%
Triumph Group $21.26 TGI N 50.3 1.1 2.05 2.80 2.98 10.4x 7.6x 7.1x 9.6x 7.9x 0.8x 0.9x NM NM $30 41%
Ge neral Dynamics $179.63 GD N 290.8 52.2 11.22 11.90 13.00 16.0x 15.1x 13.8x 12.0x 11.4x 1.7x 1.6x 14.2x 14.1x $215 20%
Huntington Ingalls $211.74 HII N 41.7 8.8 19.08 14.15 15.75 11.1x 15.0x 13.4x 10.4x 9.0x 1.1x 1.1x 17.6x 16.1x $255 20%
L3 Harris Technologies $208.94 LHX OW 224.1 46.8 8.02 9.66 11.35 26.1x 21.6x 18.4x 16.7x 14.2x 2.9x 2.7x 17.7x 17.9x $235 12%
Lo ckheed Martin $381.47 LMT N 283.9 108.3 17.59 21.60 25.35 21.7x 17.7x 15.0x 12.5x 11.5x 2.0x 1.9x 17.4x 17.0x $395 4%
Northrop Grumman $362.22 NOC OW 170.3 61.7 19.50 19.90 23.75 18.6x 18.2x 15.3x 15.7x 14.3x 2.2x 2.1x 21.5x 18.6x $375 4%
Raytheon $198.72 RTN OW 279.9 55.6 10.14 11.90 12.45 19.6x 16.7x 16.0x 10.8x 10.1x 2.0x 1.9x 18.3x 15.3x $230 16%
Booz Allen Hamilton $71.48 BAH N 141.1 10.1 2.64 3.07 3.58 27.1x 23.3x 20.0x 17.2x 15.2x 1.7x 1.6x 25.7x 23.5x $77 8%
CACI International $229.79 CA CI N 25.3 5.8 10.41 10.06 12.93 22.1x 22.8x 17.8x 16.0x 12.7x 1.5x 1.3x 11.7x 14.8x $250 9%
Le id os $83.16 LDOS N 146.0 12.1 4.39 4.70 5.25 19.0x 17.7x 15.9x 13.6x 12.7x 1.3x 1.3x 17.2x 15.2x $95 14%
Scie nce Applications International $84.56 SAIC OW 59.1 5.0 4.73 5.45 6.35 17.9x 15.5x 13.3x 12.7x 11.6x 1.1x 1.0x 11.7x 10.5x $102 21%
Aerojet Rocketdyne
$47.95 AJRD N 80.7 3.9 1.79 1.85 1.81 26.8x 25.9x 26.5x 11.7x 11.7x 1.9x 1.8x 21.7x 20.6x $52 8%
Kratos $18.82 KT OS OW 109.4 2.1 0.23 0.34 0.47 81.2x 55.7x 39.8x 28.4x 23.6x 3.0x 2.6x 139.1x 74.1x $25 33%
Maxar Technologies
$7.14 MAXR OW 59.6 0.4 (21.76) 0.78 (1.22) NM 9.1x NM 6.8x 6.9x 1.8x 1.8x NM NM $12 68%
Mercury Systems $75.59 MRCY OW 54.1 4.1 1.63 1.89 2.25 46.5x 40.0x 33.6x 24.3x 21.5x 5.4x 4.9x 62.3x 42.3x $80 6%
S&P 500 (Consensus) $2,970 SPX 146.62 164.77 182.74 20.3x 18.0x 16.3x
JPM Consensus JPM Cons ensus FCF (per s hare) Sales (bn) Operating Margin Dividend Payout Market Net Debt / YTD
Company FY1 EPS FY1 EPS FY2 EPS FY2 EPS CY1 9E CY2 0E CY1 8 CY1 9E CY2 0E CY18 CY1 9E CY20E Yi eld Ratio '19 Cap '19 EBITDA Return
Arconic 2.05 2.04 2.45 2.36 1.66 1.83 14.0 14.4 14.8 9.5% 8.1% 12.8% 0.3% 3.9% 11.8 4.4 16.2 1.9x 58%
Boeing 2.65 3.96 20.30 23.05 (1.55) 30.49 101.1 79.2 116.5 11.9% 3.9% 13.4% 2.2% 310.6% 211.7 9.6 221.3 2.0x 18%
Bombardier
(0.06) (0.10) 0.04 0.07 (0.18) 0.14 16.2 16.7 17.6 6.2% 7.7% 6.0% 0.0% 0.0% 3.4 6.4 9.8 3.6x -23%
Kaman Corp 1.90 1.75 2.30 2.17 2.05 2.11 1.9 1.0 0.8 4.4% 7.9% 8.5% 1.4% 42.1% 1.6 0.3 1.9 2.5x 5%
Spirit A eroSystems 6.95 6.81 8.10 7.63 6.57 6.72 7.2 7.9 8.4 11.7% 12.1% 12.9% 0.6% 6.9% 8.7 0.8 9.6 0.7x 16%
Textron 3.75 3.74 4.10 3.98 3.12 3.29 14.0 13.8 14.3 8.2% 9.0% 8.9% 0.2% 2.1% 11.4 3.1 14.6 1.9x 6%
TransDigm 22.10 21.69 24.85 24.82 22.86 22.22 4.0 6.0 6.2 43.6% 34.9% 40.8% 0.0% 0.0% 29.5 14.2 43.7 6.0x 63%
Triumph Group 2.65 2.55 2.95 3.16 (0.21) 0.08 3.4 2.9 2.8 NM -8.2% 7.2% 0.8% 5.7% 1.1 1.4 2.5 5.5x 86%
Ge neral Dynamics 11.90 11.87 13.00 13.07 12.63 12.71 36.2 39.3 41.1 12.3% 11.8% 12.0% 2.3% 34.3% 52.2 13.2 65.5 2.4x 17%
Huntington Ingalls 14.15 13.96 15.75 16.83 12.03 13.19 8.2 8.8 9.2 11.6% 9.0% 10.1% 1.6% 24.3% 8.8 1.2 10.0 1.2x 13%
L3 Harris Technologies 8.15 9.67 5.00 11.14 11.82 11.65 16.6 18.1 19.2 14.8% 13.0% 14.5% 1.4% 31.0% 46.8 5.4 52.2 1.7x 57%
Lo ckheed Martin 21.60 21.23 25.35 25.39 21.88 22.42 53.8 59.5 63.2 13.6% 14.3% 14.7% 2.3% 40.7% 108.3 12.4 120.7 1.3x 49%
Northrop Grumman 19.90 19.66 23.75 22.52 16.87 19.44 30.1 34.0 36.2 12.6% 11.1% 11.8% 1.3% 24.1% 61.7 12.8 74.4 2.7x 50%
Raytheon 11.90 11.58 12.45 12.83 10.86 13.00 27.1 29.0 31.0 16.8% 16.7% 16.8% 1.9% 31.7% 55.6 2.9 58.5 0.5x 32%
Booz Allen Hamilton 3.20 3.10 3.70 3.49 2.79 3.04 6.2 6.7 7.4 8.4% 9.0% 9.2% 1.3% 30.0% 10.1 1.5 11.6 2.2x 60%
CACI International 12.35 12.18 13.55 13.63 19.71 15.53 4.5 5.0 5.6 7.6% 8.5% 8.8% 0.0% 0.0% 5.8 1.6 7.4 3.4x 60%
Le id os 4.70 4.71 5.25 5.23 4.84 5.46 10.2 10.8 11.4 7.3% 7.7% 8.4% 1.6% 28.9% 12.1 2.4 14.5 2.2x 60%
Scie nce Applications International 5.45 5.52 6.35 6.16 7.22 8.09 4.7 6.4 6.7 4.7% 5.8% 6.6% 1.8% 27.1% 5.0 1.9 6.9 3.5x 35%
Aerojet Rocketdyne
1.85 1.86 1.81 1.93 2.21 2.33 1.9 2.0 2.0 14.3% 12.7% 12.1% 0.0% 0.0% 3.9 (0.1) 3.8 (0.3x) 36%
Kratos 0.34 0.28 0.47 0.46 0.14 0.25 0.6 0.7 0.8 4.9% 5.1% 4.8% 0.0% 0.0% 2.1 0.1 2.2 1.5x 34%
Maxar Technologies
0.78 0.29 (1.22) 0.42 (0.51) (0.05) 2.1 2.0 1.9 1.1% 5.6% 6.7% 0.6% 5.1% 0.4 3.1 3.5 6.0x -40%
Mercury Systems 2.10 2.07 2.27 2.31 1.21 1.79 0.6 0.7 0.8 9.5% 11.7% 12.3% 0.0% 0.0% 4.1 (0.3) 3.8 (1.6x) 60%
Pension Adjusted EPS (PAEPS) P/PAEPS EB ITDAP (bn) EV /EBITDAP Pension Adj FCF P/PAFCF
Huntington Ingalls 12.51 11.28 14.17 16.9x 18.8x 14.9x 0.8 0.8 1.0 12.1x 12.1x 10.2x 6.16 9.75 34.4x 21.7x $15
Lo ckheed Martin 14.83 17.82 18.85 25.7x 21.4x 20.2x 6.7 7.6 8.0 18.0x 15.8x 15.1x 12.84 14.93 29.7x 25.5x $26
Northrop Grumman 12.13 14.33 16.43 29.9x 25.3x 22.0x 4.0 4.3 4.7 18.8x 17.1x 15.8x 12.77 15.43 28.4x 23.5x $20
Notes: J.P. Morgan ratings: OW = Overweight; N = Neutral; UW = Underweight ; NR = Not Rated. Price targets for Dec 31, 2020. SAIC FY ends in Jan.; T GI and BAH FY ends in March; CACI, HRS and MRCY end June; T DG ends Sept.
a. BBD stock price in C$ converted based on current exchange rate to calculate ratios. b. AJRD and MAXR are covered by Ben Arnstein. All EPS calculations consistent with Bloomberg consensus. Sources: Bloomberg, company reports, and J.P. Morgan estimates.
Ne t Debt
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