Critical Review: Kansas City Southern (KSU) vs. C.H. Robinson Worldwide (CHRW)

Kansas City Southern (NYSE: KSU) and C.H. Robinson Worldwide (NASDAQ:CHRW) are both large-cap transportation companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, earnings, dividends, institutional ownership, valuation, profitability and analyst recommendations.

Institutional and Insider Ownership

84.6% of Kansas City Southern shares are owned by institutional investors. Comparatively, 90.1% of C.H. Robinson Worldwide shares are owned by institutional investors. 1.0% of Kansas City Southern shares are owned by insiders. Comparatively, 0.9% of C.H. Robinson Worldwide shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares Kansas City Southern and C.H. Robinson Worldwide’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kansas City Southern 21.52% 11.40% 5.68%
C.H. Robinson Worldwide 3.49% 37.41% 12.84%

Dividends

Kansas City Southern pays an annual dividend of $1.44 per share and has a dividend yield of 1.4%. C.H. Robinson Worldwide pays an annual dividend of $1.80 per share and has a dividend yield of 2.3%. Kansas City Southern pays out 28.9% of its earnings in the form of a dividend. C.H. Robinson Worldwide pays out 52.9% 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. Kansas City Southern has increased its dividend for 3 consecutive years and C.H. Robinson Worldwide has increased its dividend for 10 consecutive years. C.H. Robinson Worldwide is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Kansas City Southern and C.H. Robinson Worldwide’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Kansas City Southern $2.47 billion 4.47 $1.18 billion $4.98 21.04
C.H. Robinson Worldwide $13.90 billion 0.78 $848.19 million $3.40 22.67

Kansas City Southern has higher revenue, but lower earnings than C.H. Robinson Worldwide. Kansas City Southern is trading at a lower price-to-earnings ratio than C.H. Robinson Worldwide, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Kansas City Southern and C.H. Robinson Worldwide, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kansas City Southern 0 9 8 0 2.47
C.H. Robinson Worldwide 2 7 4 0 2.15

Kansas City Southern currently has a consensus price target of $106.00, indicating a potential upside of 1.15%. C.H. Robinson Worldwide has a consensus price target of $73.85, indicating a potential downside of 4.21%. Given Kansas City Southern’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Kansas City Southern is more favorable than C.H. Robinson Worldwide.

Risk and Volatility

Kansas City Southern has a beta of 0.81, suggesting that its stock price is 19% less volatile than the S&P 500. Comparatively, C.H. Robinson Worldwide has a beta of 0.42, suggesting that its stock price is 58% less volatile than the S&P 500.

Summary

Kansas City Southern beats C.H. Robinson Worldwide on 10 of the 17 factors compared between the two stocks.

About Kansas City Southern

Kansas City Southern (KCS) is a holding company. The Company has domestic and international rail operations in North America that are focused on the north/south freight corridor connecting commercial and industrial markets in the central United States with industrial cities in Mexico. The Company’s subsidiaries include The Kansas City Southern Railway Company (KCSR) and Kansas City Southern de Mexico, S.A. de C.V. (KCSM). KCSR serves a 10-state region in the midwest and southeast regions of the United States and has the north/south rail route between Kansas City, Missouri and various ports along the Gulf of Mexico in Alabama, Louisiana, Mississippi and Texas. KCSM operates a corridor of the Mexican railroad system. KCSM’s rail lines provide rail access to the United States and Mexico border crossing at Nuevo Laredo, Tamaulipas. KCSM also provides rail access to the Port of Lazaro Cardenas on the Pacific Ocean.

About C.H. Robinson Worldwide

C.H. Robinson Worldwide, Inc. is a provider of transportation services and logistics solutions through a network of offices operating in North America, Europe, Asia, Australia, New Zealand and South America. The Company’s segments include North American Surface Transportation (NAST), Global Forwarding, Robinson Fresh, and All Other and Corporate. The NAST segment provides freight transportation services across North America through a network of offices in the United States, Canada and Mexico. The primary services provided by Global Forwarding segment include ocean freight services, air freight services, and customs brokerage. The Robinson Fresh segment provides sourcing under the trade name Robinson Fresh. The All Other and Corporate segment primarily consists of Managed Services and Other Surface Transportation outside of North America. It develops global transportation and distribution networks to provide transportation and supply chain services throughout the world.

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