Contrasting Heartland Express (NASDAQ:HTLD) and Canadian National Railway (NYSE:CNI)

Heartland Express (NASDAQ:HTLD) and Canadian National Railway (NYSE:CNI) are both industrials companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, profitability, institutional ownership, earnings, dividends, risk and analyst recommendations.

Institutional and Insider Ownership

53.5% of Heartland Express shares are owned by institutional investors. Comparatively, 80.7% of Canadian National Railway shares are owned by institutional investors. 41.6% of Heartland Express shares are owned by insiders. Comparatively, 2.4% of Canadian National Railway shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

Heartland Express pays an annual dividend of $0.08 per share and has a dividend yield of 0.8%. Canadian National Railway pays an annual dividend of $2.59 per share and has a dividend yield of 2.1%. Heartland Express pays out -50.0% of its earnings in the form of a dividend. Canadian National Railway pays out 45.9% 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 3 consecutive years. Canadian National Railway is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current ratings and target prices for Heartland Express and Canadian National Railway, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Heartland Express	3	4	0	0	1.57
Canadian National Railway	0	10	9	0	2.47

Heartland Express presently has a consensus target price of $11.80, suggesting a potential upside of 13.79%. Canadian National Railway has a consensus target price of $137.49, suggesting a potential upside of 9.46%. Given Heartland Express’ higher probable upside, analysts clearly believe Heartland Express is more favorable than Canadian National Railway.

Earnings and Valuation

This table compares Heartland Express and Canadian National Railway”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Heartland Express	$719.24 million	1.11	-$12.37 million	($0.16)	-64.81
Canadian National Railway	$17.76 billion	4.26	$3.40 billion	$5.64	22.27

Canadian National Railway has higher revenue and earnings than Heartland Express. Heartland Express 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.

Profitability

This table compares Heartland Express and Canadian National Railway’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Heartland Express	N/A	N/A	N/A
Canadian National Railway	N/A	N/A	N/A

Volatility and Risk

Heartland Express has a beta of 1.35, suggesting that its share price is 35% more volatile than the S&P 500. Comparatively, Canadian National Railway has a beta of 0.96, suggesting that its share price is 4% less volatile than the S&P 500.

Summary

Canadian National Railway beats Heartland Express on 10 of the 14 factors compared between the two stocks.

About Heartland Express

Heartland Express, Inc., together with its subsidiaries, operates as a short-to-medium, and long-haul truckload carrier in the United States and Canada. It primarily provides nationwide asset-based dry van truckload service for shippers; cross-border freight and other transportation services; and temperature-controlled truckload services. The company offers its services under the Heartland Express and Millis Transfer brand names. It primarily serves retailers and manufacturers in consumer goods, appliances, food products, and automotive industries. The company was founded in 1978 and is headquartered in North Liberty, Iowa.

About Canadian National Railway

Canadian National Railway Company, together with its subsidiaries, engages in the rail, intermodal, trucking, and marine transportation and logistics business in Canada and the United States. The company provides rail services, which include equipment, custom brokerage services, transloading and distribution, business development and real estate, and private car storage services; and intermodal services, such as temperature controlled cargo, port partnerships, and logistics parks. It offers trucking services, such as door-to-door services, import and export dray, interline services, and specialized services, comprising flatbed trucks, on-deck mobile transport trays, expedited cargo, and permit/overweight services; and supply chain services. It serves automotive, coal, fertilizers, temperature controlled cargo, forest products, dimensional, grain, metal and minerals, petroleum and chemicals, consumer goods, and third party logistics applications. The company operates a rail network of approximately 20,000 route-miles of track and shipping spanning. Canadian National Railway Company was incorporated in 1919 and is headquartered in Montreal, Canada.