CSX Corporation (CSX) and Canadian National Railway (NYSE:CNI) Financial Contrast

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

Volatility and Risk

CSX Corporation has a beta of 1.3, suggesting that its share price is 30% more volatile than the S&P 500. Comparatively, Canadian National Railway has a beta of 1.11, suggesting that its share price is 11% more volatile than the S&P 500.

Earnings and Valuation

This table compares CSX Corporation and Canadian National Railway’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 3.98 $5.20 billion $1.91 26.32
Canadian National Railway $10.17 billion 5.87 $5.48 billion $3.84 20.70

Canadian National Railway has higher revenue, but lower earnings than CSX Corporation. Canadian National Railway 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%. Canadian National Railway pays an annual dividend of $1.22 per share and has a dividend yield of 1.5%. CSX Corporation pays out 41.9% of its earnings in the form of a dividend. Canadian National Railway pays out 31.8% 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. CSX Corporation has increased its dividend for 5 consecutive years. CSX Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

70.0% of CSX Corporation shares are held by institutional investors. Comparatively, 55.3% of Canadian National Railway shares are held by institutional investors. 4.8% of CSX Corporation shares are held by company insiders. Comparatively, 2.4% of Canadian National Railway shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares CSX Corporation and Canadian National Railway’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%
Canadian National Railway 30.59% 25.42% 10.24%

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for CSX Corporation and Canadian National Railway, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CSX Corporation 0 9 18 0 2.67
Canadian National Railway 0 13 5 0 2.28

CSX Corporation presently has a consensus target price of $53.78, indicating a potential upside of 6.99%. Canadian National Railway has a consensus target price of $81.36, indicating a potential upside of 2.34%. Given CSX Corporation’s stronger consensus rating and higher probable upside, equities analysts plainly believe CSX Corporation is more favorable than Canadian National Railway.

Summary

CSX Corporation beats Canadian National Railway on 10 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 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.

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