It's been five years since Northrop Grumman Corporation (NYSE:NOC) made the strategic decision to spin off its (then) barely profitable military shipbuilding business. Five long years in which that spun-off asset, now going by the name Huntington Ingalls Industries, Inc. (NYSE:HII), has had to fend for itself. Forced to walk the plank, set adrift -- call it what you will -- for half a decade now, Huntington Ingalls has charted its own course and has been master of its fortune.

Today, we're going to turn that ship around and have it exchange broadsides with its old parent company, Northrop Grumman. What we want to know is: Did Northrop Grumman make the right decision back in 2011, or is Huntington Ingalls today an even better stock than the company that cut it loose five years ago?

Let's find out.

Northrop Grumman

We'll begin back at the mother ship, defense stalwart Northrop Grumman, whose market cap, at $38.3 billion, is more than five times as great as that of spinoff Huntington Ingalls. Northrop's $2.1 billion in trailing earnings is likewise nearly five times as great as the $453 million that Huntington Ingalls earned over the past 12 months.

Valuation-wise, Northrop stock sells for 18.6 times trailing earnings. Add in the company's net debt of $5.1 billion and its debt-adjusted P/E ratio rises to 21. Growth estimates for the company aren't great -- about 6.8% annualized over the next five years, according to analysts surveyed on S&P Global Market Intelligence. That gives the stock a debt-adjusted PEG ratio of roughly 3.0.

On the plus side, Northrop Grumman boasts strong free cash flow, roughly equal to reported net income, and it pays a respectable 1.7% dividend yield.

Huntington Ingalls

Smaller, faster-moving Huntington Ingalls, in contrast, presents us with an entirely different valuation scenario. Let's start with the highlight, and the stock's main attraction to investors. Unlike most of the defense industry, whose growth rates have been constrained by tight budgets at the Pentagon, Huntington's emphasis on building long-tailed, big-ticket naval warships has analysts projecting a long-term growth rate north of 27%. As a result, not only does Huntington Ingalls stock sell for a cheaper P/E ratio (16.0) than its former parent company, but its P/E ratio looks all the cheaper when weighed against its market-leading growth rate. The fact that the company is relatively unburdened by debt (just $0.5 billion net of cash) is arguably one factor that helps keep Huntington Ingalls nimble.

Topping it all off, after praising Northrop Grumman for its strong free cash flow, we'd be remiss if we didn't point out that Huntington Ingalls' free cash flow number is even stronger. With $667 million in positive free cash flow generated over the past year, Huntington's cash profits are actually running 47% ahead of its reported net income.

Win the battle, win the war?

So far, this looks like a pretty one-sided battle. Against all odds, the subsidiary that Northrop Grumman felt so good about jettisoning five years ago is beating the erstwhile parent company on growth, on valuation -- and on the combination of growth and value that we call the PEG ratio. So is there any reason at all to prefer Northrop Grumman stock over Huntington Ingalls stock?

Well, I suppose an income-seeking investor might still prefer Northrop stock for its better dividend yield. Huntington Ingalls only pays 1.3% versus Northrop's 1.7%, after all. But honestly, when you get right down to it, I think the advantages of buying Huntington Ingalls stock have piled up so high by this point that it's safe to call the spinoff's victory lopsided.

There's only one clear winner in this fight: It's Huntington Ingalls stock by a nautical mile.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.