Head-To-Head Contrast: Canadian National Railway (CNI) versus Covenant Transportation Group (CVTI)

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

Analyst Recommendations

This is a summary of current recommendations and price targets for Canadian National Railway and Covenant Transportation Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Canadian National Railway 1 8 6 0 2.33
Covenant Transportation Group 0 3 1 0 2.25

Canadian National Railway currently has a consensus price target of C$80.33, indicating a potential downside of 0.82%. Covenant Transportation Group has a consensus price target of $23.50, indicating a potential downside of 16.04%. Given Canadian National Railway’s stronger consensus rating and higher probable upside, analysts plainly believe Canadian National Railway is more favorable than Covenant Transportation Group.

Profitability

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

Net Margins Return on Equity Return on Assets
Canadian National Railway 29.98% 25.57% 10.29%
Covenant Transportation Group 1.82% 5.30% 2.02%

Institutional & Insider Ownership

54.4% of Canadian National Railway shares are owned by institutional investors. Comparatively, 65.6% of Covenant Transportation Group shares are owned by institutional investors. 2.4% of Canadian National Railway shares are owned by company insiders. Comparatively, 35.2% of Covenant Transportation Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Dividends

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

Valuation and Earnings

This table compares Canadian National Railway and Covenant Transportation Group’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Canadian National Railway $9.11 billion 6.63 $2.75 billion C$3.90 20.77
Covenant Transportation Group $670.65 million 0.76 $16.83 million $0.69 40.57

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

Risk and Volatility

Canadian National Railway has a beta of 1.11, meaning that its share price is 11% more volatile than the S&P 500. Comparatively, Covenant Transportation Group has a beta of 1.69, meaning that its share price is 69% more volatile than the S&P 500.

Summary

Canadian National Railway beats Covenant Transportation Group on 11 of the 17 factors compared between the two stocks.

Canadian National Railway Company Profile

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.

Covenant Transportation Group Company Profile

Covenant Transportation Group, Inc. is a provider of expedited long haul freight transportation, primarily using two-person driver teams in transcontinental lanes. The Company’s services also include refrigerated, dedicated, cross-border, regional and brokerage. The Company’s segments include Truckload and Other. The Truckload segment includes the operations of Covenant Transport, Inc. (Covenant Transport), its flagship operation, which provides expedited long haul, dedicated, temperature-controlled and regional solo-driver service; Southern Refrigerated Transport, Inc. (SRT), which provides primarily long haul, regional, dedicated and intermodal temperature-controlled service, and Star Transportation, Inc. (Star), which provides regional solo-driver and dedicated services, primarily in the southeastern United States. The Company provides truckload transportation services throughout the continental United States, into and out of Mexico, and into and out of portions of Canada.

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