Top Railroad Stocks for Q1 2020

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The railroad industry is one of the major components of the transportation sector and is closely tied to the economy’s growth. Railroad companies operate vast rail networks that transport agricultural products, packaged foods, commodities, electronics and other goods to companies and consumers. Big names in the sector include Union Pacific Corp. (UNP), Hong Kong-based MTR Corporation Ltd., and CSX Corp. (CSX). Railroad stocks, as represented by the SPDR S&P Transportation ETF (XTN), have underperformed the broader market, rising 17.2% compared to the S&P 500’s gain of 26.0% over the past 12 months.

Here are the top 3 railroad stocks with the best value, the fastest earnings growth, and the most momentum. All figures in this story are as of January 15, 2020.

Best Value Railroad Stocks

These are the railroad stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.

Best Value Railroad Stocks
  Price ($) Market Cap ($B) 12-Month Trailing P/E Ratio
Central Japan Railway Co. (CJPRY) 19.76 39.1 9.5
East Japan Railway Co. (EJPRY) 14.97 33.5 12.2
Greenbrier Companies Inc. (GBX) 27.07 0.9 14.8
Source: TradingView
  • Central Japan Railway Co.: Central Japan Railway is a Japan-based company primarily focused on railway services. The company also offers bus transportation and real estate services, and operates department stores, hotels, restaurants, and construction businesses.
  • East Japan Railway Co.: East Japan Railway is a Japan-based company primarily engaged in the railway business, offering services such as the bullet train network and the Tokyo metropolitan network. The company also leases real estate and is engages in the operation of hotel, travel, and restaurant businesses.
  • Greenbrier Companies Inc.: Greenbrier Companies is primarily engaged in the design, manufacture, and marketing of railroad freight car equipment. The company manufactures both railcars and marine vessels, provides repair and refurbishment for intermodal and conventional railcars, and provides complementary leasing and services. Greenbrier reported earlier this month earnings results for the quarter ending November 30, 2019. It posted revenue growth of 39.3% compared to the same three-month period a year ago, but earnings per share (EPS) declined 57.4%.

Fastest Growing Railroad Stocks

These are the railroad stocks with the highest year-over-year (YOY) EPS growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.

Fastest Growing Railroad Stocks
  Price ($) Market Cap ($B) EPS Growth (%)
Trinity Industries Inc. (TRN) 20.70 2.5 105.3
Canadian National Railway Co. (CNR.TO) 94.28 67.4 7.8
Central Japan Railway Co. (CJPRY) 19.76 39.1 7.3
Source: TradingView; YCharts; Trinity Industries and Canada National Railway Investor Relations
  • Trinity Industries Inc.: Trinity Industries provides rail transportation products and services. The company also provides products and services to the energy, chemical, agriculture, transportation, and construction sectors. Trinity Industries announced on Wednesday that E. Jean Savage, a member of the company’s Board of Directors and Vice President of the Surface Mining & Technology division of Caterpillar Inc. (CAT), has been appointed Chief Executive Officer (CEO) and President, effective February 17, 2020. She will remain a member of the Board.
  • Canadian National Railway Co.: Canadian National Railway is a Canada-based company engaged in the rail transportation business. The company operates a rail network throughout Canada and the U.S., and transports forest products, grain and grain products, coal, sulfur, fertilizers, and automotive products. Canadian National Railway announced earlier this month that it has signed a new multi-year agreement with NorFalco Sales, a division of Glencore Canada Corporation, that will provide freight transportation of sulfuric acid from NorFalco’s rail-served production facilities in various regions throughout the country.
  • Central Japan Railway Co.: See above for company description.

Railroad Stocks with the Most Momentum

These are the railroad stocks that had the highest price change the last 12 months.

Railroad Stocks with the Most Momentum
  Price ($) Market Cap ($B) 12-Month Trailing Price Change (%)
Kansas City Southern (KSU) 159.71 15.8 57.6
Canadian Pacific Railway Ltd. (CP.TO) 262.04 36.0 33.1
Norfolk Southern Corp. (NSC) 202.89 52.9 24.9
S&P 500 N/A N/A 26.0
SPDR S&P Transportation ETF (XTN) N/A N/A 17.2
Source: Investopedia; Yahoo! Finance
  • Kansas City Southern: Kansas City Southern is a holding company that, through its subsidiaries, operates a railroad system providing shippers with freight services in commercial and industrial markets in the U.S. and Mexico.
  • Canadian Pacific Railway Ltd.: Canadian Pacific Railway is a Canada-based company that offers rail transportation services, including intermodal shipping, rail siding construction, and logistics services. Canadian Pacific announced earlier this month that it had set a company record for largest shipment of grain and grain product’s during the final quarter of 2019. The new record reached was 7.9 million metric tonnes of Canadian grain and grain products, beating the previous record set in Q4 of last year by 400,000 metric tonnes.
  • Norfolk Southern Corp.: Norfolk Southern is a holding company that provides rail transportation services. The company transports raw materials, intermediate products, and finished goods primarily in the Southeast, East, and Midwest, and via interchange with rail carriers, to and from the rest of the U.S.

Source: Investopedia