Financial Analysis: ArcBest Corporation (ARCB) versus Union Pacific Corporation (UNP)
ArcBest Corporation (NASDAQ: ARCB) and Union Pacific Corporation (NYSE:UNP) are both transportation companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, risk, earnings, valuation, analyst recommendations, institutional ownership and profitability.
This table compares ArcBest Corporation and Union Pacific Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Union Pacific Corporation||21.79%||22.70%||8.05%|
This is a summary of recent recommendations for ArcBest Corporation and Union Pacific Corporation, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Union Pacific Corporation||0||9||8||0||2.47|
ArcBest Corporation presently has a consensus price target of $29.00, suggesting a potential downside of 3.49%. Union Pacific Corporation has a consensus price target of $113.53, suggesting a potential upside of 5.90%. Given Union Pacific Corporation’s stronger consensus rating and higher probable upside, analysts plainly believe Union Pacific Corporation is more favorable than ArcBest Corporation.
Valuation and Earnings
This table compares ArcBest Corporation and Union Pacific Corporation’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|ArcBest Corporation||$2.77 billion||0.28||$146.83 million||$0.86||34.94|
|Union Pacific Corporation||$20.72 billion||4.14||$9.80 billion||$5.52||19.42|
Union Pacific Corporation has higher revenue and earnings than ArcBest Corporation. Union Pacific Corporation is trading at a lower price-to-earnings ratio than ArcBest Corporation, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
ArcBest Corporation has a beta of 1.7, indicating that its stock price is 70% more volatile than the S&P 500. Comparatively, Union Pacific Corporation has a beta of 0.81, indicating that its stock price is 19% less volatile than the S&P 500.
ArcBest Corporation pays an annual dividend of $0.32 per share and has a dividend yield of 1.1%. Union Pacific Corporation pays an annual dividend of $2.42 per share and has a dividend yield of 2.3%. ArcBest Corporation pays out 37.2% of its earnings in the form of a dividend. Union Pacific Corporation pays out 43.8% 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. Union Pacific Corporation has increased its dividend for 7 consecutive years. Union Pacific Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Insider & Institutional Ownership
85.8% of ArcBest Corporation shares are owned by institutional investors. Comparatively, 78.6% of Union Pacific Corporation shares are owned by institutional investors. 1.0% of ArcBest Corporation shares are owned by company insiders. Comparatively, 0.2% of Union Pacific Corporation shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
Union Pacific Corporation beats ArcBest Corporation on 12 of the 17 factors compared between the two stocks.
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.
Union Pacific Corporation Company Profile
Union Pacific Corporation is a railroad operating company in the United States. The Company operates through its principal operating company, Union Pacific Railroad Company (UPRR). Its business mix includes Agricultural Products, Automotive, Chemicals, Coal, Industrial Products and Intermodal. Its freight traffic consists of bulk, manifest, and premium business. Bulk traffic primarily consists of coal, grain, soda ash, ethanol, rock and crude oil shipped in unit trains-trains transporting a single commodity from one origin to one destination. Manifest traffic includes individual carload or less than train-load business involving commodities, such as lumber, paper, food and chemicals. The transportation of finished vehicles, auto parts, intermodal containers and truck trailers are included as part of its premium business. As of December 31, 2016, its network included 32,070 route miles, linking Pacific Coast and Gulf Coast ports with the Midwest and Eastern United States gateways.
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