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 railroad industry does not have its own benchmark, but as a part of the broader transportation sector its performance can be reasonably approximated by the iShares Transportation Average ETF (IYT). IYT has outperformed the broader market with a total return of 78.4% over the past 12 months, above the Russell 1000's total return of 53.5%. The benchmark figures above and all statistics in the tables below are as of March 15.
Here are the top 3 railroad stocks with the best value, the fastest growth, and the most momentum.
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|
|Canadian Pacific Railway Ltd. ( CP.TO)||CA$464.64||CA$61.9||25.8|
|CSX Corp. (CSX)||93.48||71.3||26.0|
|Union Pacific Corp. (UNP)||212.67||142.5||27.0|
- 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. In early march, Canadian Pacific announced updates to its Hydrogen Locomotive Program, whose goal is to create a locomotive that produces zero emissions. In the latest development, Canadian Pacific plans to retrofit a diesel-powered locomotive with Ballard hydrogen fuel cells. It would be the first hydrogen-powered line-haul freight locomotive in North America.
- CSX Corp.: CSX provides domestic and international freight transportation services. The company offers rail, domestic container shipping, barging, intermodal, and contract logistics services between global hubs. The company's rail transportation services are focused in the eastern U.S. In February, CSX announced that its board of directors authorized an 8% increase in its quarterly dividend, from $0.26 to $0.28 per share. The new dividend was paid on March 15, 2021.
- Union Pacific Corp.: Union Pacific transports agricultural, automotive, chemical, and other products. The company provides routes from West Coast and Gulf Coast ports to eastern gateways, Canada, and Mexico.
These are the railroad stocks with the highest year-over-year (YOY) operating income, also called operating earnings, growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders. Operating income excludes non-operating income and expenses (such as investment gains or losses), one-time items, as well as interest and taxes. This helps investors get a clearer picture at the strength of the underlying business without the effect of unusual one-off events, such as large tax credits, asset sales, or lawsuit settlements. If you decided to invest in a company, it's still important to look at these one-off non-operating expenses and incomes, as they can still influence a company's overall financial health.
|Fastest Growing Railroad Stocks|
|Price ($)||Market Cap ($B)||Operating Income Growth (%)|
|CSX Corp. (CSX)||93.48||71.3||5.3|
|Canadian Pacific Railway Ltd. ( CP)||372.40||49.6||2.6|
|Norfolk Southern Corp. (NSC)||260.27||65.6||1.4|
- CSX Corp.: See company description above.
- Canadian Pacific Railway Ltd.: See company description above. Note that common shares of Canadian Pacific Railway Ltd. trade on both the Toronto Stock Exchange and the New York Stock Exchange.
- Norfolk Southern Corp.: Norfolk Southern is a rail transportation company operating primarily in the Southeast, East, and Midwest. The company transports raw materials, intermediate products, and finished goods. Through agreements with other carriers, it also provides service throughout the U.S., as well as transport of overseas freight.
These are the railroad stocks that had the highest total return over the last 12 months.
|Railroad Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Greenbrier Companies Inc. ( GBX)||48.83||1.6||172.2|
|Norfolk Southern Corp. (NSC)||260.27||65.6||80.5|
|Kansas City Southern ( KSU)||219.81||20.0||73.9|
|iShares Transportation Average ETF (IYT)||N/A||N/A||78.4|
- 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. In February, Greenbrier announced plans to form GBX Leasing, a joint venture with The Longwood Group, a transportation equipment advisory and asset management firm. GBX Leasing will develop a portfolio of leased railcars primarily built by Greenbrier. The initial equity investment in the JV will benefit from specific tax advantages related to financial losses under the U.S. CARES Act passed in early 2020 to address the impact of the COVID-19 pandemic.
- Norfolk Southern Corp.: See company description above.
- 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.
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YCharts. "Financial Data." Accessed Mar. 16, 2021.
Canadian Pacific Railway Ltd. "CP to employ Ballard fuel cells in Hydrogen Locomotive Project." Accessed Mar. 16, 2021.
CSX Corp. "CSX to Acquire Pan Am Railways in New England." Accessed Dec. 9, 2020.
Canadian Pacific Railway Ltd. "2020 Annual Report," Page 161. Accessed Mar. 16, 2021.
Greenbrier Companies Inc. "Greenbrier forms JV to grow owned railcar lease fleet; extends commercial platform." Accessed Mar. 16, 2021.