CSX Corporation (NASDAQ: CSX) and Union Pacific Corporation (NYSE:UNP) are both large-cap transportation companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, valuation, risk, dividends, institutional ownership, profitability and analyst recommendations.

Risk and Volatility

CSX Corporation has a beta of 1.3, meaning that its stock price is 30% more volatile than the S&P 500. Comparatively, Union Pacific Corporation has a beta of 0.81, meaning that its stock price is 19% less volatile than the S&P 500.

Profitability

This table compares CSX Corporation and Union Pacific Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CSX Corporation 15.46% 16.93% 5.57%
Union Pacific Corporation 21.79% 22.70% 8.05%

Insider & Institutional Ownership

69.8% of CSX Corporation shares are owned by institutional investors. Comparatively, 78.6% of Union Pacific Corporation shares are owned by institutional investors. 4.8% of CSX Corporation shares are owned by company insiders. Comparatively, 0.2% of Union Pacific Corporation shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations and price targets for CSX Corporation and Union Pacific Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CSX Corporation 0 9 18 0 2.67
Union Pacific Corporation 0 9 8 0 2.47

CSX Corporation currently has a consensus target price of $53.78, suggesting a potential upside of 7.14%. Union Pacific Corporation has a consensus target price of $113.53, suggesting a potential upside of 7.82%. Given Union Pacific Corporation’s higher probable upside, analysts clearly believe Union Pacific Corporation is more favorable than CSX Corporation.

Earnings & Valuation

This table compares CSX Corporation and Union Pacific Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
CSX Corporation $11.55 billion 3.97 $5.20 billion $1.91 26.28
Union Pacific Corporation $20.72 billion 4.07 $9.80 billion $5.52 19.08

Union Pacific Corporation has higher revenue and earnings than CSX Corporation. Union Pacific Corporation is trading at a lower price-to-earnings ratio than CSX Corporation, indicating that it is currently the more affordable of the two stocks.

Dividends

CSX Corporation pays an annual dividend of $0.80 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 2.3%. CSX Corporation pays out 41.9% 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. 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.

Summary

Union Pacific Corporation beats CSX Corporation on 11 of the 17 factors compared between the two stocks.

About CSX Corporation

CSX Corporation is a transportation company. The Company provides rail-based freight transportation services, including traditional rail service and transport of intermodal containers and trailers, as well as other transportation services, such as rail-to-truck transfers and bulk commodity operations. The Company categorizes its products into three primary lines of business: merchandise, intermodal and coal. The Company’s intermodal business links customers to railroads through trucks and terminals. The Company’s merchandise business consists of shipments in markets, such as agricultural and food products, fertilizers, chemicals, automotive, metals and equipment, minerals and forest products. The Company’s coal business transports domestic coal, coke and iron ore to electricity-generating power plants, steel manufacturers and industrial plants, as well as export coal to deep-water port facilities.

About Union Pacific Corporation

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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