Competitor on the East Coast: Norfolk Southern
As the heading implies, Norfolk Southern Corp. (NYSE:NSC) operates in the same territory as CSX Corporation (NYSE:CSX) and is just a bit smaller in terms of rail network. Norfolk Southern Corp. (NYSE:NSC) pays a slightly higher (2.65%) yield than CSX, but trades at a slightly higher P/E of 13.6 times TTM earnings, with similar growth expectations. When it comes to Norfolk Southern Corp. (NYSE:NSC) and CSX, it is a coin flip, but I give the slight edge to CSX Corporation (NYSE:CSX) due to shares being just a little cheaper.
West Coast Giant: Union Pacific
Union Pacific Corporation (NYSE:UNP) is a much larger company, almost three times the size of CSX by market cap. Union Pacific Corporation (NYSE:UNP) operates more than 32,000 miles of rail in the western United States. Although Union Pacific Corporation (NYSE:UNP) is the largest, it is also the lowest yielder (1.77%) and the most expensive at 18.3 times TTM earnings. However, it is expected to be the greatest beneficiary of such trends as increased crude oil shipments and more automobiles shipped west, and earnings are projected to climb by 15.1% this year and 14.4% next year, slightly above peers.
Buy, Sell, or Hold?
Union Pacific Corporation (NYSE:UNP) seems to be a bit expensive right now, but the other two companies are very reasonably valued relative to their projected growth. CSX Corporation (NYSE:CSX) should benefit greatly from manufacturing and construction gains over the next few years, and longer-term should benefit from increased shipments of coal, the demand for which is historically low right now.
The article This Company Will Grow its Profits in the Recovery originally appeared on Fool.com.
Matthew Frankel has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Matthew is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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