Canadian Pacific Railway Limited (CP) vs. Hub Group (HUBG) Critical Survey

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

Risk & Volatility

Canadian Pacific Railway Limited has a beta of 1.09, suggesting that its share price is 9% more volatile than the S&P 500. Comparatively, Hub Group has a beta of 1.4, suggesting that its share price is 40% more volatile than the S&P 500.

Insider & Institutional Ownership

70.5% of Canadian Pacific Railway Limited shares are held by institutional investors. Comparatively, 94.4% of Hub Group shares are held by institutional investors. 0.0% of Canadian Pacific Railway Limited shares are held by insiders. Comparatively, 5.4% of Hub Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings for Canadian Pacific Railway Limited and Hub Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Canadian Pacific Railway Limited 0 4 19 0 2.83
Hub Group 1 3 3 0 2.29

Canadian Pacific Railway Limited presently has a consensus target price of $187.72, suggesting a potential upside of 21.90%. Hub Group has a consensus target price of $40.40, suggesting a potential upside of 13.96%. Given Canadian Pacific Railway Limited’s stronger consensus rating and higher possible upside, research analysts plainly believe Canadian Pacific Railway Limited is more favorable than Hub Group.

Dividends

Canadian Pacific Railway Limited pays an annual dividend of $1.67 per share and has a dividend yield of 1.1%. Hub Group does not pay a dividend. Canadian Pacific Railway Limited pays out 19.9% of its earnings in the form of a dividend.

Valuation & Earnings

This table compares Canadian Pacific Railway Limited and Hub Group’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Canadian Pacific Railway Limited $5.13 billion 4.39 $2.64 billion $8.40 18.33
Hub Group $3.73 billion 0.32 $146.62 million $1.69 20.98

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

Profitability

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

Net Margins Return on Equity Return on Assets
Canadian Pacific Railway Limited 25.49% 33.06% 8.38%
Hub Group 1.50% 9.49% 4.46%

Summary

Canadian Pacific Railway Limited beats Hub Group on 11 of the 16 factors compared between the two stocks.

Canadian Pacific Railway Limited 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.

Hub Group Company Profile

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.

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