Top Railroad Stocks for Q2 2022

TRN, CJPRY, and UNP are top for value, growth, and momentum, respectively

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 Norfolk Southern Corp. and CSX Corp.

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 underperformed the broader market with a total return of 4.7% over the past 12 months, below the Russell 1000's total return of 8.3%. These performance figures and all others below are as of March 10, 2022.

Here are the top 3 railroad stocks with the best value, the fastest growth, and the 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
Trinity Industries Inc. (TRN) 32.09 2.7 17.4
CSX Corp. (CSX) 34.89 76.5 20.8
Norfolk Southern Corp. (NSC) 269.85 64.7 22.3

Source: YCharts

  • Trinity Industries Inc.: Trinity Industries provides rail transportation products and services in North America. It offers railcar leasing and management services, as well as railcar manufacturing and modifications. For Q4 2021, ended Dec. 31, Trinity Industries reported net income from continuing operations attributable to the company of $15.8 million compared with net loss the prior-year quarter, as well as robust revenue growth year-over-year (YOY). Revenue growth was driven by higher deliveries in the company's Rail Products business.
  • CSX Corp.: CSX is a transportation company that provides rail, intermodal, and rail-to-truck transload services and solutions. It serves customers in a variety of markets, including energy, industrial, construction, agricultural, and consumer products. In mid-February, CSX announced a 7% increase in its quarterly dividend. The dividend of $0.10 per share is payable March 15 to shareholders of record as of Feb. 28, 2022.
  • Norfolk Southern Corp.: Norfolk Southern is a holding company that, through subsidiaries, engages in the rail transportation of finished goods, intermediate products, and raw materials. It primarily offers its services in the East, Midwest, and Southeast.

Fastest Growing Railroad Stocks

These are the top railroad stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company.

On Nov. 15, 2021, President Biden signed into law the Infrastructure Investment and Jobs Act, which will invest approximately $550 billion in America's roads and bridges, water infrastructure, resilience, internet, and more. Of this $550 billion, $66 billion will be allocated to improving America's passenger and freight rail system.

Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.

Fastest Growing Railroad Stocks
  Price ($) Market Cap ($B) EPS Growth (%) Revenue Growth (%)
Central Japan Railway Co. (CJPRY) 12.99 25.6 1,320 3.7
Trinity Industries Inc. (TRN) 32.09 2.7 N/A (see company description below) 46.0
Greenbrier Companies Inc (GBX) 50.46 1.6 N/A (see company description below) 36.7

Source: YCharts

  • Central Japan Railway Co.: Central Japan Railway is a Japan-based railway services provider. The company operates Tokaido Shinkansen railways and other railway and bus services. it also operates department stores, merchandising businesses, and various other services.
  • Trinity Industries Inc.: See company description above. Trinity Industries does not have an EPS growth figure in the table above because EPS went from negative to positive over the period in question.
  • Greenbrier Companies Inc.: Greenbrier Companies is a supplier of equipment and services to global freight transportation markets. The company designs and manufactures freight railcars and marine barges in North America, Europe, and Brazil. It also provides freight railcar wheel services, parts, maintenance, and retrofitting services in North America. Greenbrier appointed Lorie Tekorius to president and chief executive officer (CEO) effective March 1. She succeeds co-founder William A. Furman, who continues to serve as executive chair. Tekorius was most recently president and chief operating officer of the company. Greenbrier Companies does not have an EPS growth figure in the table above because EPS went from negative to positive over the period in question.

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
  Price ($) Market Cap ($B) 12-Month Trailing Total Return (%)
Union Pacific Corp. (UNP) 259.65 165.4 24.2
Westinghouse Air Brake Technologies Corp. (WAB) 89.00 16.5 17.4
Canadian National Railway Co. (CNI) 127.70 89.4 13.5
Russell 1000 N/A N/A 8.3
iShares Transportation Average ETF (IYT) N/A N/A 4.7

Source: YCharts

  • Union Pacific Corp.: Union Pacific connects 23 states in the western two-thirds of the U.S. by rail. It operates rail transportation services from all major West Coast and Gulf Coast ports to eastern gateways, connects with Canada's rail systems, and serves all six major Mexico gateways. In early February, the company announced a share repurchase program that enables it to buy up to 100 million of its common shares. The program is set to continue through March 31, 2025.
  • Westinghouse Air Brake Technologies Corp.: Westinghouse Air Brake Technologies, known as Wabtec Corp., provides equipment and services for the freight and transit rail industries. It manufactures and provides components for new and existing freight cars. The company also builds new commuter locomotives, overhauls locomotives, and offers infrastructure and rail control equipment. For Q4 2021, the company reported that net income more than doubled on modest net sales growth YOY. Performance was driven by higher freight segment sales and partially offset by lower transit segment sales.
  • Canadian National Railway Co.: Canadian National Railway is a Canada-based transportation company that offers fully-integrated rail and other transportation services, including intermodal, trucking, freight forwarding, warehousing, and distribution.

The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

Article Sources

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  1. YCharts. "Financial Data."

  2. Trinity Industries Inc. "Trinity Industries, Inc. Announces Fourth Quarter and Full Year 2021 Results."

  3. CSX Corp. "CSX Corp. Announces Increase to Quarterly Dividend."

  4. The White House. "Updated Fact Sheet: Bipartisan Infrastructure Investment and Jobs Act."

  5. Greenbrier Companies Inc. "Greenbrier Appoints Lorie Tekorius as Chief Executive Officer."

  6. Union Pacific Corp. "Union Pacific Corporation Declares First Quarter 2022 Dividend and Announces New Share Repurchase Authorization."

  7. Westinghouse Air Brake Technologies Corp. "Wabtec Reports Strong 4th Quarter 2021 Results."

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