Hub Group (NASDAQ: HUBG) and Union Pacific Corporation (NYSE:UNP) are both transportation companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, risk, valuation, profitability, earnings, institutional ownership and dividends.

Risk and Volatility

Hub Group has a beta of 1.38, indicating that its share price is 38% more volatile than the S&P 500. Comparatively, Union Pacific Corporation has a beta of 0.81, indicating that its share price is 19% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Hub Group 1.50% 9.49% 4.46%
Union Pacific Corporation 21.79% 22.70% 8.05%

Institutional & Insider Ownership

91.1% of Hub Group shares are owned by institutional investors. Comparatively, 78.6% of Union Pacific Corporation shares are owned by institutional investors. 5.4% of Hub Group shares are owned by insiders. Comparatively, 0.2% of Union Pacific Corporation shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Hub Group and Union Pacific Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hub Group 1 4 3 0 2.25
Union Pacific Corporation 0 9 8 0 2.47

Hub Group currently has a consensus price target of $40.40, suggesting a potential upside of 2.02%. 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 Hub Group.

Earnings and Valuation

This table compares Hub Group and Union Pacific Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Hub Group $3.73 billion 0.36 $146.62 million $1.69 23.43
Union Pacific Corporation $20.72 billion 4.14 $9.80 billion $5.52 19.42

Union Pacific Corporation has higher revenue and earnings than Hub Group. Union Pacific 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.

Dividends

Union Pacific Corporation pays an annual dividend of $2.42 per share and has a dividend yield of 2.3%. Hub Group does not pay a dividend. Union Pacific Corporation pays out 43.8% of its earnings in the form of a dividend. Hub Group has increased its dividend for 7 consecutive years.

Summary

Union Pacific Corporation beats Hub Group on 11 of the 17 factors compared between the two stocks.

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.

About Union Pacific Corporation

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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