Financial Analysis: Canadian Pacific Kansas City (NYSE:CP) and West Japan Railway (OTCMKTS:WJRYY)

Canadian Pacific Kansas City (NYSE:CP) and West Japan Railway (OTCMKTS:WJRYY) are both transportation companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, institutional ownership, valuation, dividends, earnings and profitability.

Profitability

This table compares Canadian Pacific Kansas City and West Japan Railway’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Canadian Pacific Kansas City	28.41%	8.79%	4.85%
West Japan Railway	7.25%	9.59%	3.29%

Risk and Volatility

Canadian Pacific Kansas City has a beta of 1.08, indicating that its stock price is 8% more volatile than the S&P 500. Comparatively, West Japan Railway has a beta of 0.29, indicating that its stock price is 71% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations for Canadian Pacific Kansas City and West Japan Railway, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Canadian Pacific Kansas City	1	4	12	1	2.72
West Japan Railway	0	0	0	0	0.00

Canadian Pacific Kansas City currently has a consensus price target of $91.69, suggesting a potential upside of 26.30%. Given Canadian Pacific Kansas City’s stronger consensus rating and higher probable upside, analysts clearly believe Canadian Pacific Kansas City is more favorable than West Japan Railway.

Institutional & Insider Ownership

72.2% of Canadian Pacific Kansas City shares are held by institutional investors. 0.0% of Canadian Pacific Kansas City shares are held 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.

Dividends

Canadian Pacific Kansas City pays an annual dividend of $0.66 per share and has a dividend yield of 0.9%. West Japan Railway pays an annual dividend of $0.51 per share and has a dividend yield of 2.6%. Canadian Pacific Kansas City pays out 20.1% of its earnings in the form of a dividend. West Japan Railway pays out 26.7% 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.

Earnings & Valuation

This table compares Canadian Pacific Kansas City and West Japan Railway”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Canadian Pacific Kansas City	$10.62 billion	6.16	$2.71 billion	$3.28	22.13
West Japan Railway	$11.22 billion	0.79	$752.13 million	$1.91	10.24

Canadian Pacific Kansas City has higher earnings, but lower revenue than West Japan Railway. West Japan Railway is trading at a lower price-to-earnings ratio than Canadian Pacific Kansas City, indicating that it is currently the more affordable of the two stocks.

Summary

Canadian Pacific Kansas City beats West Japan Railway on 14 of the 17 factors compared between the two stocks.

About Canadian Pacific Kansas City

Canadian Pacific Kansas City Limited, together with its subsidiaries, owns and operates a transcontinental freight railway in Canada, the United States, and Mexico. The company transports bulk commodities, including grain, coal, potash, fertilizers, and sulphur; merchandise freight, such as forest products, energy, chemicals and plastics, metals, minerals, consumer products, and automotive; and intermodal traffic comprising retail goods in overseas containers. It also provides rail and intermodal transportation services over a network of approximately 20,000 miles serving business centres. The company was formerly known as Canadian Pacific Railway Limited and changed its name to Canadian Pacific Kansas City Limited in April 2023. Canadian Pacific Kansas City Limited was incorporated in 1881 and is headquartered in Calgary, Canada.

About West Japan Railway

West Japan Railway Company provides railway transport services in Japan. The company operates through Mobility, Retail, Real Estate, Travel and Regional Solutions, and Other segments. The Mobility segment provides passenger transportation, station operation and management, cleaning and maintenance, construction, machinery and equipment installation, rolling stock and other facility construction services, as well as engages in the railway operations and electric works. The Retail segment sells goods; offers food and other wholesale operation services; and operates department stores. The Real Estate segment sells and leases real estate properties, as well as operates shopping centers and hotels. The Travel and Regional Solutions segment provides travel agency and regional solutions. The Other segment engages in the advertising and other businesses. The company is also involved in the operation of convenience stores, restaurants, and souvenir shops; and provision of credit cards and electronic money services. The company was incorporated in 1987 and is based in Osaka, Japan.