YRC Worldwide (NASDAQ: YRCW) and Kansas City Southern (NYSE:KSU) are both transportation companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, profitability, analyst recommendations, valuation, risk, dividends and institutional ownership.

Dividends

Kansas City Southern pays an annual dividend of $1.44 per share and has a dividend yield of 1.4%. YRC Worldwide does not pay a dividend. Kansas City Southern pays out 28.9% of its earnings in the form of a dividend. YRC Worldwide has increased its dividend for 3 consecutive years.

Valuation & Earnings

This table compares YRC Worldwide and Kansas City Southern’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
YRC Worldwide $4.80 billion 0.09 $254.10 million ($0.02) -670.16
Kansas City Southern $2.47 billion 4.53 $1.18 billion $4.98 21.31

Kansas City Southern has higher revenue, but lower earnings than YRC Worldwide. YRC Worldwide is trading at a lower price-to-earnings ratio than Kansas City Southern, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

YRC Worldwide has a beta of 3.77, suggesting that its share price is 277% more volatile than the S&P 500. Comparatively, Kansas City Southern has a beta of 0.79, suggesting that its share price is 21% less volatile than the S&P 500.

Profitability

This table compares YRC Worldwide and Kansas City Southern’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
YRC Worldwide N/A -0.70% 0.16%
Kansas City Southern 21.52% 11.40% 5.68%

Insider and Institutional Ownership

83.3% of YRC Worldwide shares are owned by institutional investors. Comparatively, 84.5% of Kansas City Southern shares are owned by institutional investors. 3.7% of YRC Worldwide shares are owned by insiders. Comparatively, 1.0% of Kansas City Southern 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.

Analyst Recommendations

This is a summary of current recommendations for YRC Worldwide and Kansas City Southern, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
YRC Worldwide 0 2 3 0 2.60
Kansas City Southern 0 10 7 0 2.41

YRC Worldwide presently has a consensus target price of $16.33, suggesting a potential upside of 21.80%. Kansas City Southern has a consensus target price of $103.92, suggesting a potential downside of 2.07%. Given YRC Worldwide’s stronger consensus rating and higher probable upside, research analysts clearly believe YRC Worldwide is more favorable than Kansas City Southern.

Summary

Kansas City Southern beats YRC Worldwide on 9 of the 17 factors compared between the two stocks.

YRC Worldwide Company Profile

YRC Worldwide Inc. is a holding company. The Company, through its subsidiaries, offers its customers a range of transportation services. The Company operates through two segments: YRC Freight and Regional Transportation. The Company has less-than-truckload (LTL) networks in North America with local, regional, national and international capabilities. YRC Freight segment offers a range of services for the transportation of industrial, commercial and retail goods in national, regional and international markets, primarily through the operation of owned or leased equipment in its North American ground distribution network. It provides transportation services for various categories of goods, which include apparel, appliances, automotive parts, chemicals, food, furniture, glass, machinery, metal and metal products. The Company’s Regional Transportation segment consists of USF Holland LLC (Holland), New Penn Motor Express, LLC (New Penn) and USF Reddaway Inc. (Reddaway).

Kansas City Southern Company Profile

Kansas City Southern (KCS) is a holding company. The Company has domestic and international rail operations in North America that are focused on the north/south freight corridor connecting commercial and industrial markets in the central United States with industrial cities in Mexico. The Company’s subsidiaries include The Kansas City Southern Railway Company (KCSR) and Kansas City Southern de Mexico, S.A. de C.V. (KCSM). KCSR serves a 10-state region in the midwest and southeast regions of the United States and has the north/south rail route between Kansas City, Missouri and various ports along the Gulf of Mexico in Alabama, Louisiana, Mississippi and Texas. KCSM operates a corridor of the Mexican railroad system. KCSM’s rail lines provide rail access to the United States and Mexico border crossing at Nuevo Laredo, Tamaulipas. KCSM also provides rail access to the Port of Lazaro Cardenas on the Pacific Ocean.

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