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 networks that transport agricultural products, packaged foods, commodities, electronics, and other goods to companies and consumers. Major companies in the industry include Union Pacific Corp. (UNP), Norfolk Southern Corp. (NSC), and CSX Corp. (CSX). The iShares Transportation Average ETF (IYT) does not track railroad stocks directly but represents the broader transportation sector and a reasonable approximation of this industry's performance. IYT has underperformed the broader market with a total return of 7.8% compared to the Russell 1000's total return of 15.7% over the past 12 months as of September 16. All other data throughout are as of September 17.
Here are the top 3 railroad stocks with the best value, growth, and most momentum.
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|
|Greenbrier Companies Inc. (GBX)||29.20||1.0||11.5|
|Central Japan Railway Co. (CJPRY)||15.52||30.5||17.0|
|CSX Corp. (CSX)||79.35||60.7||21.3|
- Greenbrier Companies Inc.: Greenbrier Companies is primarily engaged in the design, manufacturing, 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. Given COVID-19's impact on Greenbrier, the board announced that Chairman and CEO Bill Furman will lead the company until September of 2022, but at lower compensation and without cash-based performance bonuses.
- Central Japan Railway Co.: Central Japan Railway, based in Japan, is primarily focused on railway services. The company also offers bus transportation and real estate services, and operates department stores, hotels, restaurants, and construction businesses. In its report of financial results for the three months ended June 30, Central Japan Railway announced a net income loss on a 72.7% year-over-year (YOY) decrease in operating revenue. The company declined to give guidance for the current fiscal year as a result of the impact of the COVID-19 pandemic.
- CSX Corp.: CSX provides international freight transportation services. The company offers rail, domestic container shipping, barging, intermodal, and contract logistics services between hubs around the world. The company's rail transportation services are focused in the eastern U.S.
Railroad Stocks With the Most Profit Growth or Least Profit Decline
These are the railroad stocks with the highest YOY earnings per share (EPS) growth or lowest EPS decline for the most recent quarter. A company’s ability to maintain profitability in a difficult business environment can be a sign of good management and/or a strong business model.
|Railroad Stocks With the Most Profit Growth or Least Profit Decline|
|Price ($)||Market Cap ($B)||EPS Growth (%)|
|Greenbrier Companies Inc. (GBX)||29.20||1.0||80.4|
|Kansas City Southern (KSU)||186.65||17.6||-9.4|
|Canadian Pacific Railway Ltd. (CP.TO)||CA$397.88||CA$53.9||-9.7|
- Greenbrier Companies Inc.: See above for company description.
- Kansas City Southern: Kansas City Southern is a holding company that, through its subsidiaries, operates a railroad system that provides customers with freight services in commercial and industrial markets in the U.S. and Mexico.
- Canadian Pacific Railway Ltd.: Canadian Pacific Railway is a Canada-based company that offers rail transportation services, including intermodal shipping, and logistics services. On September 15, the company opened a new, major facility in Montréal for receiving, unloading, carrying, and delivering various commodities by rail.
Railroad Stocks with the Most Momentum
These are the railroad stocks that had the highest total return over the last 12 months.
|Railroad Stocks with the Most Momentum|
|Market Cap ($B)||12-Month Trailing Total Return (%)|
|Kansas City Southern (KSU)||186.65||17.6||42.0|
|Canadian Pacific Railway Ltd. (CP.TO)||CA$397.88||CA$53.9||31.1|
|Norfolk Southern Corp. (NSC)||220.91||56.4||23.6|
|iShares Transportation Average ETF (IYT)||N/A||N/A||7.8|
- Kansas City Southern: See above for company description.
- Canadian Pacific Railway Ltd.: See above for company description.
- Norfolk Southern Corp.: Norfolk Southern is a rail transportation service company. The business provides transportation services for raw materials, intermediate products, and finished goods. While Norfolk Southern's business is centered in the East, Southeast, and Midwest, it offers customers nationwide, including to Atlantic and Gulf Coast ports, by connecting with other rail carriers through interchange service arrangements.
YCharts. "YCharts." Accessed Sept. 18, 2020.
Greenbrier Companies Inc. "Greenbrier Chairman and CEO to remain through pandemic crisis; sets retirement date." Accessed Sept. 18, 2020.
Central Japan Railway Co. "Summary of the Consolidated Financial Results for the Three Months Ended June 30,2020," Pages 1-3. Accessed Sept. 18, 2020.
Canadian Pacific Railway Ltd. "CP officially opens new multi-commodity transload facility in Montréal." Accessed Sept. 18, 2020.