Analyzing XPO Logistics (XPO) & Canadian Pacific Railway (NYSE:CP)

Canadian Pacific Railway (NYSE: CP) and XPO Logistics (NYSE:XPO) are both large-cap transportation companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, valuation, institutional ownership, analyst recommendations, earnings, risk and profitability.

Profitability

This table compares Canadian Pacific Railway and XPO Logistics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Canadian Pacific Railway 36.88% 31.61% 8.63%
XPO Logistics 2.11% 7.66% 2.11%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Canadian Pacific Railway and XPO Logistics, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Canadian Pacific Railway 0 2 15 0 2.88
XPO Logistics 0 1 17 0 2.94

Canadian Pacific Railway presently has a consensus price target of $193.71, suggesting a potential upside of 8.32%. XPO Logistics has a consensus price target of $95.65, suggesting a potential upside of 3.66%. Given Canadian Pacific Railway’s higher possible upside, analysts clearly believe Canadian Pacific Railway is more favorable than XPO Logistics.

Risk & Volatility

Canadian Pacific Railway has a beta of 1.08, suggesting that its stock price is 8% more volatile than the S&P 500. Comparatively, XPO Logistics has a beta of 2.55, suggesting that its stock price is 155% more volatile than the S&P 500.

Valuation & Earnings

This table compares Canadian Pacific Railway and XPO Logistics’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Canadian Pacific Railway $5.05 billion 5.13 $1.85 billion $12.77 14.00
XPO Logistics $15.38 billion 0.72 $312.40 million $2.40 38.45

Canadian Pacific Railway has higher earnings, but lower revenue than XPO Logistics. Canadian Pacific Railway is trading at a lower price-to-earnings ratio than XPO Logistics, indicating that it is currently the more affordable of the two stocks.

Dividends

Canadian Pacific Railway pays an annual dividend of $1.83 per share and has a dividend yield of 1.0%. XPO Logistics does not pay a dividend. Canadian Pacific Railway pays out 14.3% of its earnings in the form of a dividend. Canadian Pacific Railway has raised its dividend for 2 consecutive years.

Insider and Institutional Ownership

67.1% of Canadian Pacific Railway shares are held by institutional investors. 0.0% of Canadian Pacific Railway shares are held by insiders. Comparatively, 15.8% of XPO Logistics shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

Canadian Pacific Railway beats XPO Logistics on 10 of the 17 factors compared between the two stocks.

Canadian Pacific Railway Company Profile

Canadian Pacific Railway Limited, together with its subsidiaries, owns and operates a transcontinental freight railway in Canada and the United States. The Company operates through rail transportation segment. The Company’s transports bulk commodities, merchandise freight, and intermodal traffic over a network of approximately 12,400 miles. Its railway feeds directly into the United States heartland from the east and west coasts. Its Bulk commodities include grain, coal, potash, fertilizers and sulfur. Its Merchandise freight consists of finished vehicles and machinery, as well as forest and industrial and consumer products. Its Intermodal traffic consists of retail goods in overseas containers that can be transported by train, ship and truck and in domestic containers and trailers that can be moved by train and truck. Its subsidiaries include Canadian Pacific Railway Company, Soo Line Railroad Company, Delaware and Hudson Railway Company, Inc. and Mount Stephen Properties Inc.

XPO Logistics Company Profile

XPO Logistics, Inc. is a global provider of supply chain solutions. The Company operates in two segments: Transportation and Logistics. The Transportation segment provides freight brokerage, last mile, less-than-truckload (LTL), full truckload and global forwarding services. The Logistics segment provides a range of contract logistics services, including highly engineered and customized solutions, value-added warehousing and distribution, cold chain solutions and other inventory solutions. Its freight brokerage operations encompass truck brokerage globally, as well as intermodal, drayage and expedite services in North America. In Logistics segment, it provides warehousing and distribution solutions, such as factory support, aftermarket support, integrated manufacturing, packaging, labeling and transportation. As of December 31, 2016, the Company had more than 10,000 independent owner operators under contract to provide drayage, expedite, last mile and LTL services to its customers.

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