ArcBest Corporation (ARCB) & Union Pacific Corporation (UNP) Financial Review

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

Risk & Volatility

Union Pacific Corporation has a beta of 0.81, suggesting that its share price is 19% less volatile than the S&P 500. Comparatively, ArcBest Corporation has a beta of 1.7, suggesting that its share price is 70% more volatile than the S&P 500.

Institutional & Insider Ownership

78.6% of Union Pacific Corporation shares are held by institutional investors. Comparatively, 85.8% of ArcBest Corporation shares are held by institutional investors. 0.2% of Union Pacific Corporation shares are held by company insiders. Comparatively, 1.0% of ArcBest Corporation shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Union Pacific Corporation pays an annual dividend of $2.42 per share and has a dividend yield of 2.1%. ArcBest Corporation pays an annual dividend of $0.32 per share and has a dividend yield of 1.1%. Union Pacific Corporation pays out 43.8% of its earnings in the form of a dividend. ArcBest Corporation pays out 37.2% 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. ArcBest Corporation has raised its dividend for 7 consecutive years.

Analyst Recommendations

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Union Pacific Corporation 0 9 8 0 2.47
ArcBest Corporation 0 5 1 0 2.17

Union Pacific Corporation currently has a consensus price target of $113.53, indicating a potential upside of 0.12%. ArcBest Corporation has a consensus price target of $29.00, indicating a potential upside of 2.11%. Given ArcBest Corporation’s higher possible upside, analysts clearly believe ArcBest Corporation is more favorable than Union Pacific Corporation.

Profitability

This table compares Union Pacific Corporation and ArcBest 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%
ArcBest Corporation 0.83% 4.92% 2.26%

Valuation and Earnings

This table compares Union Pacific Corporation and ArcBest Corporation’s top-line 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 4.38 $9.80 billion $5.52 20.54
ArcBest Corporation $2.77 billion 0.26 $146.83 million $0.86 33.02

Union Pacific Corporation has higher revenue and earnings than ArcBest Corporation. Union Pacific Corporation is trading at a lower price-to-earnings ratio than ArcBest Corporation, indicating that it is currently the more affordable of the two stocks.

Summary

Union Pacific Corporation beats ArcBest Corporation on 10 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.

ArcBest Corporation Company Profile

ArcBest Corporation is a holding company of businesses providing integrated logistics solutions. The Company operates through three segments: Asset-Based, which consists of ABF Freight System, Inc. and other subsidiaries; ArcBest, which represents the consolidation of the operations of the Premium Logistics, Transportation Management and Household Goods Moving Services segments, and FleetNet, which includes the results of operations of FleetNet America, Inc. (FleetNet). Its Asset-Based operations offer transportation of general commodities through standard, time-critical, expedited and guaranteed LTL services-nationally and regionally. Its ArcBest segment includes truckload, expedite, international, warehousing, freight transportation, management services and moving services. Its FleetNet segment provides roadside assistance and maintenance management services for commercial vehicles to customers in the United States and Canada through a network of third-party service providers.

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