Head to Head Contrast: Norfolk Southern (NYSE:NSC) and West Japan Railway (OTCMKTS:WJRYY)

Norfolk Southern (NYSE:NSC) and West Japan Railway (OTCMKTS:WJRYY) are both large-cap transportation companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, earnings, dividends, institutional ownership and profitability.

Analyst Ratings

This is a summary of recent ratings for Norfolk Southern and West Japan Railway, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Norfolk Southern	1	9	12	0	2.50
West Japan Railway	0	0	0	0	0.00

Norfolk Southern presently has a consensus target price of $267.48, indicating a potential upside of 1.90%. Given Norfolk Southern’s stronger consensus rating and higher probable upside, analysts clearly believe Norfolk Southern is more favorable than West Japan Railway.

Earnings and Valuation

This table compares Norfolk Southern 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
Norfolk Southern	$12.12 billion	4.88	$2.62 billion	$14.64	17.93
West Japan Railway	$11.22 billion	0.95	$752.13 million	$1.59	14.22

Norfolk Southern has higher revenue and earnings than West Japan Railway. West Japan Railway is trading at a lower price-to-earnings ratio than Norfolk Southern, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Norfolk Southern and West Japan Railway’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Norfolk Southern	27.40%	19.65%	6.30%
West Japan Railway	6.66%	9.01%	3.07%

Institutional & Insider Ownership

75.1% of Norfolk Southern shares are held by institutional investors. 0.1% of Norfolk Southern shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Norfolk Southern pays an annual dividend of $5.40 per share and has a dividend yield of 2.1%. West Japan Railway pays an annual dividend of $0.51 per share and has a dividend yield of 2.3%. Norfolk Southern pays out 36.9% of its earnings in the form of a dividend. West Japan Railway pays out 32.1% 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. West Japan Railway is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

Norfolk Southern has a beta of 1.31, suggesting that its stock price is 31% more volatile than the S&P 500. Comparatively, West Japan Railway has a beta of 0.37, suggesting that its stock price is 63% less volatile than the S&P 500.

Summary

Norfolk Southern beats West Japan Railway on 14 of the 16 factors compared between the two stocks.

About Norfolk Southern

Norfolk Southern Corporation, together with its subsidiaries, engages in the rail transportation of raw materials, intermediate products, and finished goods in the United States. The company transports agriculture, forest, and consumer products comprising soybeans, wheat, corn, fertilizers, livestock and poultry feed, food products, food oils, flour, sweeteners, ethanol, lumber and wood products, pulp board and paper products, wood fibers, wood pulp, beverages, and canned goods; chemicals consist of sulfur and related chemicals, petroleum products comprising crude oil, chlorine and bleaching compounds, plastics, rubber, industrial chemicals, chemical wastes, sand, and natural gas liquids; metals and construction materials, such as steel, aluminum products, machinery, scrap metals, cement, aggregates, minerals, clay, transportation equipment, and military-related products; and automotive, including finished motor vehicles and automotive parts, as well as coal. It also transports overseas freight through various Atlantic and Gulf Coast ports; and operates an intermodal network. As of December 31, 2023, the company operated approximately 19,100 route miles in 22 states and the District of Columbia. Norfolk Southern Corporation was incorporated in 1980 and is headquartered in Atlanta, Georgia.

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.