Canadian National Railway (NYSE: CNI) and Norfolk Souther Corporation (NYSE:NSC) are both large-cap transportation companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, valuation, risk, profitability, analyst recommendations, earnings and institutional ownership.
Earnings & Valuation
This table compares Canadian National Railway and Norfolk Souther Corporation’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Canadian National Railway||$10.17 billion||5.87||$5.48 billion||$3.84||20.70|
|Norfolk Souther Corporation||$10.23 billion||3.34||$4.29 billion||$6.16||19.26|
Canadian National Railway has higher revenue, but lower earnings than Norfolk Souther Corporation. Norfolk Souther 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.
Risk and Volatility
Canadian National Railway has a beta of 1.11, suggesting that its stock price is 11% more volatile than the S&P 500. Comparatively, Norfolk Souther Corporation has a beta of 1.33, suggesting that its stock price is 33% more volatile than the S&P 500.
Canadian National Railway pays an annual dividend of $1.22 per share and has a dividend yield of 1.5%. Norfolk Souther Corporation pays an annual dividend of $2.44 per share and has a dividend yield of 2.1%. Canadian National Railway pays out 31.8% of its earnings in the form of a dividend. Norfolk Souther Corporation pays out 39.6% 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 7 consecutive years and Norfolk Souther Corporation has increased its dividend for 5 consecutive years.
This is a breakdown of current ratings and recommmendations for Canadian National Railway and Norfolk Souther Corporation, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Canadian National Railway||0||13||5||0||2.28|
|Norfolk Souther Corporation||3||14||7||0||2.17|
Canadian National Railway currently has a consensus price target of $81.36, indicating a potential upside of 2.34%. Norfolk Souther Corporation has a consensus price target of $109.53, indicating a potential downside of 7.67%. Given Canadian National Railway’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Canadian National Railway is more favorable than Norfolk Souther Corporation.
This table compares Canadian National Railway and Norfolk Souther 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%|
|Norfolk Souther Corporation||17.66%||14.45%||5.18%|
Insider and Institutional Ownership
55.6% of Canadian National Railway shares are owned by institutional investors. Comparatively, 70.5% of Norfolk Souther Corporation shares are owned by institutional investors. 2.4% of Canadian National Railway shares are owned by company insiders. Comparatively, 0.4% of Norfolk Souther Corporation shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Canadian National Railway beats Norfolk Souther Corporation on 11 of the 17 factors compared between the two stocks.
About Canadian National Railway
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.
About Norfolk Souther Corporation
Norfolk Southern Corporation is a holding company engaged in the rail transportation business. As of December 31, 2016, the Company operated approximately 19,500 miles of road primarily in the East and Midwest. The Company is engaged in the rail transportation of raw materials, intermediate products and finished goods primarily in the Southeast, East and Midwest. The Company, through interchange with rail carriers, to and from the rest of the United States. The Company also transports overseas freight through various Atlantic and Gulf Coast ports. It provides logistics services and offers the intermodal network in the eastern half of the United States. The Company’s system reaches various manufacturing plants, electric generating facilities, mines, distribution centers and other businesses located in its service area. The Company’s intermodal market group consists of shipments moving in trailers, domestic and international containers, and RoadRailer equipment.
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