Critical Review: Hub Group (HUBG) versus Canadian National Railway (CNI)

Hub Group (NASDAQ: HUBG) and Canadian National Railway (NYSE:CNI) are both transportation companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, dividends, profitability, earnings, analyst recommendations, valuation and institutional ownership.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Hub Group and Canadian National Railway, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hub Group 1 7 3 0 2.18
Canadian National Railway 0 9 4 0 2.31

Hub Group presently has a consensus price target of $44.38, suggesting a potential upside of 11.92%. Canadian National Railway has a consensus price target of $78.83, suggesting a potential downside of 3.05%. Given Hub Group’s higher possible upside, equities analysts plainly believe Hub Group is more favorable than Canadian National Railway.

Earnings and Valuation

This table compares Hub Group 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
Hub Group $3.73 billion 0.36 $146.62 million $1.69 23.46
Canadian National Railway $10.50 billion 5.82 $5.65 billion $3.90 20.85

Canadian National Railway has higher revenue and earnings than Hub Group. Canadian National Railway is trading at a lower price-to-earnings ratio than Hub Group, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

90.4% of Hub Group shares are owned by institutional investors. Comparatively, 54.3% of Canadian National Railway shares are owned by institutional investors. 5.4% of Hub Group shares are owned by insiders. Comparatively, 2.4% of Canadian National Railway shares are owned by 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

Canadian National Railway pays an annual dividend of $1.32 per share and has a dividend yield of 1.6%. Hub Group does not pay a dividend. Canadian National Railway pays out 33.8% of its earnings in the form of a dividend. Hub Group has raised its dividend for 5 consecutive years.

Volatility & Risk

Hub Group has a beta of 1.41, meaning that its share price is 41% more volatile than the S&P 500. Comparatively, Canadian National Railway has a beta of 1.13, meaning that its share price is 13% more volatile than the S&P 500.

Profitability

This table compares Hub Group and Canadian National Railway’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hub Group 1.50% 9.49% 4.46%
Canadian National Railway 29.98% 25.57% 10.29%

Summary

Canadian National Railway beats Hub Group on 10 of the 17 factors compared between the two stocks.

About Hub Group

Hub Group, Inc. is an asset-light freight transportation management company. The Company offers intermodal, truck brokerage and logistics services. It operates through two business segments: Mode and Hub. The Mode segment markets and operates its freight transportation services, consisting of intermodal, truck brokerage and logistics, primarily through agents entering into contractual arrangements with Mode Transportation, LLC (Mode LLC). The Mode segment also operates a temperature protected services division. The Hub segment provides intermodal, truck brokerage and logistics services through a network of operating centers throughout the United States, Canada and Mexico. The Hub segment services customers in a range of industries, including consumer products, retail and durable goods. It operates through a network of operating centers and independent business owners. The Company also provides drayage services with its own drayage operations.

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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