Norfolk Souther Corporation (NYSE: NSC) and Hub Group (NASDAQ:HUBG) are both transportation companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, analyst recommendations, dividends, institutional ownership, earnings, risk and valuation.

Dividends

Norfolk Souther Corporation pays an annual dividend of $2.44 per share and has a dividend yield of 2.1%. Hub Group does not pay a dividend. Norfolk Souther Corporation pays out 39.6% of its earnings in the form of a dividend. Hub Group has increased its dividend for 7 consecutive years.

Insider and Institutional Ownership

70.5% of Norfolk Souther Corporation shares are owned by institutional investors. Comparatively, 93.7% of Hub Group shares are owned by institutional investors. 0.4% of Norfolk Souther Corporation shares are owned by insiders. Comparatively, 5.4% of Hub Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Norfolk Souther Corporation and Hub Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Norfolk Souther Corporation 17.66% 14.45% 5.18%
Hub Group 1.50% 9.49% 4.46%

Volatility & Risk

Norfolk Souther Corporation has a beta of 1.33, suggesting that its stock price is 33% more volatile than the S&P 500. Comparatively, Hub Group has a beta of 1.4, suggesting that its stock price is 40% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings for Norfolk Souther Corporation and Hub Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Norfolk Souther Corporation 3 14 7 0 2.17
Hub Group 1 3 3 0 2.29

Norfolk Souther Corporation currently has a consensus target price of $109.53, indicating a potential downside of 7.91%. Hub Group has a consensus target price of $40.40, indicating a potential upside of 10.99%. Given Hub Group’s stronger consensus rating and higher possible upside, analysts clearly believe Hub Group is more favorable than Norfolk Souther Corporation.

Earnings and Valuation

This table compares Norfolk Souther Corporation and Hub Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Norfolk Souther Corporation $10.23 billion 3.35 $4.29 billion $6.16 19.31
Hub Group $3.73 billion 0.33 $146.62 million $1.69 21.54

Norfolk Souther Corporation has higher revenue and earnings than Hub Group. Norfolk Souther Corporation is trading at a lower price-to-earnings ratio than Hub Group, indicating that it is currently the more affordable of the two stocks.

Summary

Norfolk Souther Corporation beats Hub Group on 9 of the 17 factors compared between the two stocks.

About Norfolk Souther Corporation

Norfolk Southern Corporation is a holding company engaged in the rail transportation business. As of December 31, 2016, the Company operated approximately 19,500 miles of road primarily in the East and Midwest. The Company is engaged in the rail transportation of raw materials, intermediate products and finished goods primarily in the Southeast, East and Midwest. The Company, through interchange with rail carriers, to and from the rest of the United States. The Company also transports overseas freight through various Atlantic and Gulf Coast ports. It provides logistics services and offers the intermodal network in the eastern half of the United States. The Company’s system reaches various manufacturing plants, electric generating facilities, mines, distribution centers and other businesses located in its service area. The Company’s intermodal market group consists of shipments moving in trailers, domestic and international containers, and RoadRailer equipment.

About Hub Group

Hub Group, Inc. is an asset-light freight transportation management company. The Company offers intermodal, truck brokerage and logistics services. It operates through two business segments: Mode and Hub. The Mode segment markets and operates its freight transportation services, consisting of intermodal, truck brokerage and logistics, primarily through agents entering into contractual arrangements with Mode Transportation, LLC (Mode LLC). The Mode segment also operates a temperature protected services division. The Hub segment provides intermodal, truck brokerage and logistics services through a network of operating centers throughout the United States, Canada and Mexico. The Hub segment services customers in a range of industries, including consumer products, retail and durable goods. It operates through a network of operating centers and independent business owners. The Company also provides drayage services with its own drayage operations.

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