Union Pacific Corporation (UNP) versus CSX Corporation (CSX) Financial Analysis

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

Dividends

Union Pacific Corporation pays an annual dividend of $2.42 per share and has a dividend yield of 2.1%. CSX Corporation pays an annual dividend of $0.80 per share and has a dividend yield of 1.5%. Union Pacific Corporation pays out 43.8% of its earnings in the form of a dividend. CSX Corporation pays out 41.9% 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 raised its dividend for 7 consecutive years.

Profitability

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

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

Institutional and Insider Ownership

78.4% of Union Pacific Corporation shares are held by institutional investors. Comparatively, 69.8% of CSX Corporation shares are held by institutional investors. 0.2% of Union Pacific Corporation shares are held by insiders. Comparatively, 4.8% of CSX Corporation shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Union Pacific Corporation and CSX Corporation’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Union Pacific Corporation $20.72 billion 4.46 $9.80 billion $5.52 20.89
CSX Corporation $11.55 billion 4.20 $5.20 billion $1.91 27.80

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.

Analyst Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Union Pacific Corporation 0 10 8 0 2.44
CSX Corporation 0 9 17 0 2.65

Union Pacific Corporation presently has a consensus target price of $113.69, suggesting a potential downside of 1.43%. CSX Corporation has a consensus target price of $54.27, suggesting a potential upside of 2.21%. Given CSX Corporation’s stronger consensus rating and higher possible upside, analysts clearly believe CSX Corporation is more favorable than Union Pacific Corporation.

Risk & Volatility

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

Summary

Union Pacific Corporation beats CSX Corporation on 9 of the 17 factors compared between the two stocks.

Union Pacific Corporation Company Profile

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.

CSX Corporation Company Profile

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.

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