BAE Systems PLC (ADR) (BAESY), Northrop Grumman Corporation (NOC): Military Survivors for a Changing World

The Boeing Company (NYSE:BA)’s 2012 revenue was about $80 billion, so the current backlog leads to a fairly solid outlook for the company’s top line over the next four years or so. Boeing also increased its earnings guidance for the year.

On the military side, cost-cutting is the familiar theme. However, strength in The Boeing Company (NYSE:BA)’s Networking and Space Systems business has helped to offset much of the top-line hit from weakness in its other military lines. Cost-cutting also improved the military business’ margins, leading to an increase in this group’s contribution to the bottom line. So management appears to be making the right changes in a competitive business.

For those concerned about sequestration cuts, The Boeing Company (NYSE:BA) is a good choice to gain some military exposure without taking on a huge risk. The strength in its commercial aircraft business should be more than sufficient to support its streamlining efforts on the military side. And when the military business turns around, Boeing should be well-positioned to benefit.

The Boeing Company (NYSE:BA) trades with a P/E of about 19, above both BAE Systems PLC (ADR) (OTCMKTS:BAESY) and Northrop Grumman Corporation (NYSE:NOC). However, the backlog in the company’s non-military business is more than enough to support that premium valuation. The shares yield around 1.8%.

Looking for Change

Military specialists Northrop and BAE Systems PLC (ADR) (OTCMKTS:BAESY) have been performing well, and they look like they still have more upside potential because they trade at discounts to their peers. They are both worth a look, though investors seeking consistent dividends should stick with Northrop. The Boeing Company (NYSE:BA), meanwhile, provides more growth minded investors access to growing demand for aircraft and a military “kicker” when that business turns around.

The article 2 Military Survivors for a Changing World originally appeared on Fool.com.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool owns shares of NOC. 

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