Analyzing Canadian National Railway (CNI) and Union Pacific Corporation (UNP)
Canadian National Railway (NYSE: CNI) and Union Pacific Corporation (NYSE:UNP) are both large-cap transportation companies, but which is the better stock? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, profitability, dividends, analyst recommendations and valuation.
Valuation and Earnings
This table compares Canadian National Railway and Union Pacific Corporation’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Canadian National Railway||$10.50 billion||5.80||$5.65 billion||$3.84||21.12|
|Union Pacific Corporation||$20.72 billion||4.26||$9.80 billion||$5.52||20.00|
Union Pacific Corporation has higher revenue and earnings than Canadian National Railway. Union Pacific Corporation is trading at a lower price-to-earnings ratio than Canadian National Railway, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of current ratings and recommmendations for Canadian National Railway and Union Pacific Corporation, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Canadian National Railway||0||12||5||0||2.29|
|Union Pacific Corporation||1||13||5||0||2.21|
Canadian National Railway currently has a consensus price target of $83.62, suggesting a potential upside of 3.11%. Union Pacific Corporation has a consensus price target of $113.65, suggesting a potential upside of 2.96%. Given Canadian National Railway’s stronger consensus rating and higher probable upside, research analysts plainly believe Canadian National Railway is more favorable than Union Pacific Corporation.
This table compares Canadian National Railway and Union Pacific Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Canadian National Railway||30.59%||25.42%||10.24%|
|Union Pacific Corporation||21.79%||22.70%||8.05%|
Insider and Institutional Ownership
54.4% of Canadian National Railway shares are owned by institutional investors. Comparatively, 78.3% of Union Pacific Corporation shares are owned by institutional investors. 2.4% of Canadian National Railway shares are owned by insiders. Comparatively, 0.2% of Union Pacific Corporation shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Volatility & Risk
Canadian National Railway has a beta of 1.13, suggesting that its stock price is 13% more volatile than the S&P 500. Comparatively, Union Pacific Corporation has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500.
Canadian National Railway pays an annual dividend of $1.32 per share and has a dividend yield of 1.6%. Union Pacific Corporation pays an annual dividend of $2.42 per share and has a dividend yield of 2.2%. Canadian National Railway pays out 34.4% of its earnings in the form of a dividend. Union Pacific Corporation pays out 43.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Canadian National Railway has increased its dividend for 5 consecutive years and Union Pacific Corporation has increased its dividend for 7 consecutive years. Union Pacific Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Canadian National Railway beats Union Pacific Corporation on 10 of the 16 factors compared between the two stocks.
Canadian National Railway Company Profile
Canadian National Railway Company is engaged in the rail and related transportation business. The Company’s network of approximately 20,000 route miles of track spans Canada and mid-America, connecting approximately three coasts, including the Atlantic, the Pacific and the Gulf of Mexico and serving the cities and ports of Vancouver, Prince Rupert (British Columbia), Montreal, Halifax, New Orleans, and Mobile (Alabama), and the metropolitan areas of Toronto, Edmonton, Winnipeg, Calgary, Chicago, Memphis, Detroit, Duluth (Minnesota)/Superior (Wisconsin), and Jackson (Mississippi), with connections to all points in North America. Its network and connections to all Class I railroads provide its customers access to the three North American Free Trade Agreement nations. It carries over 300 million tons of cargo, serving exporters, importers, retailers, farmers and manufacturers. Its freight includes seven commodity representing a portfolio of goods.
Union Pacific Corporation Company Profile
Union Pacific Corporation is a railroad operating company in the United States. The Company operates through its principal operating company, Union Pacific Railroad Company (UPRR). Its business mix includes Agricultural Products, Automotive, Chemicals, Coal, Industrial Products and Intermodal. Its freight traffic consists of bulk, manifest, and premium business. Bulk traffic primarily consists of coal, grain, soda ash, ethanol, rock and crude oil shipped in unit trains-trains transporting a single commodity from one origin to one destination. Manifest traffic includes individual carload or less than train-load business involving commodities, such as lumber, paper, food and chemicals. The transportation of finished vehicles, auto parts, intermodal containers and truck trailers are included as part of its premium business. As of December 31, 2016, its network included 32,070 route miles, linking Pacific Coast and Gulf Coast ports with the Midwest and Eastern United States gateways.
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