Canadian Pacific Railway Limited (NYSE: CP) and ArcBest Corporation (NASDAQ:ARCB) are both transportation companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, profitability, analyst recommendations, valuation, institutional ownership, risk and dividends.

Volatility and Risk

Canadian Pacific Railway Limited has a beta of 1.11, indicating that its stock price is 11% more volatile than the S&P 500. Comparatively, ArcBest Corporation has a beta of 1.78, indicating that its stock price is 78% more volatile than the S&P 500.

Valuation and Earnings

This table compares Canadian Pacific Railway Limited and ArcBest Corporation’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Canadian Pacific Railway Limited $5.30 billion 4.61 $2.72 billion $8.40 19.93
ArcBest Corporation $2.77 billion 0.30 $146.83 million $0.86 37.73

Canadian Pacific Railway Limited has higher revenue and earnings than ArcBest Corporation. Canadian Pacific Railway Limited is trading at a lower price-to-earnings ratio than ArcBest Corporation, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Canadian Pacific Railway Limited and ArcBest Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Canadian Pacific Railway Limited 0 4 19 0 2.83
ArcBest Corporation 0 6 1 0 2.14

Canadian Pacific Railway Limited currently has a consensus target price of $188.74, indicating a potential upside of 12.75%. ArcBest Corporation has a consensus target price of $27.40, indicating a potential downside of 15.56%. Given Canadian Pacific Railway Limited’s stronger consensus rating and higher probable upside, analysts plainly believe Canadian Pacific Railway Limited is more favorable than ArcBest Corporation.

Dividends

Canadian Pacific Railway Limited pays an annual dividend of $1.80 per share and has a dividend yield of 1.1%. ArcBest Corporation pays an annual dividend of $0.32 per share and has a dividend yield of 1.0%. Canadian Pacific Railway Limited pays out 21.4% of its earnings in the form of a dividend. ArcBest Corporation pays out 37.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Canadian Pacific Railway Limited is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

65.9% of Canadian Pacific Railway Limited shares are owned by institutional investors. Comparatively, 84.9% of ArcBest Corporation shares are owned by institutional investors. 0.0% of Canadian Pacific Railway Limited shares are owned by insiders. Comparatively, 1.0% of ArcBest Corporation shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Canadian Pacific Railway Limited and ArcBest Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Canadian Pacific Railway Limited 25.49% 33.06% 8.38%
ArcBest Corporation 0.83% 4.92% 2.26%

Summary

Canadian Pacific Railway Limited beats ArcBest Corporation on 12 of the 16 factors compared between the two stocks.

Canadian Pacific Railway Limited Company Profile

Canadian Pacific Railway Limited, together with its subsidiaries, owns and operates a transcontinental freight railway in Canada and the United States. The Company operates through rail transportation segment. The Company’s transports bulk commodities, merchandise freight, and intermodal traffic over a network of approximately 12,400 miles. Its railway feeds directly into the United States heartland from the east and west coasts. Its Bulk commodities include grain, coal, potash, fertilizers and sulfur. Its Merchandise freight consists of finished vehicles and machinery, as well as forest and industrial and consumer products. Its Intermodal traffic consists of retail goods in overseas containers that can be transported by train, ship and truck and in domestic containers and trailers that can be moved by train and truck. Its subsidiaries include Canadian Pacific Railway Company, Soo Line Railroad Company, Delaware and Hudson Railway Company, Inc. and Mount Stephen Properties Inc.

ArcBest Corporation Company Profile

ArcBest Corporation is a holding company of businesses providing integrated logistics solutions. The Company operates through three segments: Asset-Based, which consists of ABF Freight System, Inc. and other subsidiaries; ArcBest, which represents the consolidation of the operations of the Premium Logistics, Transportation Management and Household Goods Moving Services segments, and FleetNet, which includes the results of operations of FleetNet America, Inc. (FleetNet). Its Asset-Based operations offer transportation of general commodities through standard, time-critical, expedited and guaranteed LTL services-nationally and regionally. Its ArcBest segment includes truckload, expedite, international, warehousing, freight transportation, management services and moving services. Its FleetNet segment provides roadside assistance and maintenance management services for commercial vehicles to customers in the United States and Canada through a network of third-party service providers.

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