Union Pacific Corporation (NYSE: UNP) and Covenant Transportation Group (NASDAQ:CVTI) are both transportation companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, valuation, profitability and risk.

Risk & Volatility

Union Pacific Corporation has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500. Comparatively, Covenant Transportation Group has a beta of 1.68, suggesting that its stock price is 68% more volatile than the S&P 500.

Profitability

This table compares Union Pacific Corporation and Covenant Transportation Group’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%
Covenant Transportation Group 1.82% 5.35% 2.05%

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Union Pacific Corporation $20.72 billion 4.37 $9.80 billion $5.52 20.51
Covenant Transportation Group $678.55 million 0.78 $97.66 million $0.69 41.87

Union Pacific Corporation has higher revenue and earnings than Covenant Transportation Group. Union Pacific Corporation is trading at a lower price-to-earnings ratio than Covenant Transportation Group, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

78.4% of Union Pacific Corporation shares are held by institutional investors. Comparatively, 62.1% of Covenant Transportation Group shares are held by institutional investors. 0.2% of Union Pacific Corporation shares are held by company insiders. Comparatively, 35.2% of Covenant Transportation Group shares are held by company 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.

Dividends

Union Pacific Corporation pays an annual dividend of $2.42 per share and has a dividend yield of 2.1%. Covenant Transportation Group does not pay a dividend. Union Pacific Corporation pays out 43.8% of its earnings in the form of a dividend. Union Pacific Corporation has increased its dividend for 7 consecutive years.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Union Pacific Corporation and Covenant Transportation Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Union Pacific Corporation 1 13 4 0 2.17
Covenant Transportation Group 0 3 1 0 2.25

Union Pacific Corporation currently has a consensus target price of $113.88, indicating a potential upside of 0.61%. Covenant Transportation Group has a consensus target price of $23.00, indicating a potential downside of 20.39%. Given Union Pacific Corporation’s higher probable upside, equities analysts clearly believe Union Pacific Corporation is more favorable than Covenant Transportation Group.

Summary

Union Pacific Corporation beats Covenant Transportation Group on 12 of the 17 factors compared between the two stocks.

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.

About Covenant Transportation Group

Covenant Transportation Group, Inc. is a provider of expedited long haul freight transportation, primarily using two-person driver teams in transcontinental lanes. The Company’s services also include refrigerated, dedicated, cross-border, regional and brokerage. The Company’s segments include Truckload and Other. The Truckload segment includes the operations of Covenant Transport, Inc. (Covenant Transport), its flagship operation, which provides expedited long haul, dedicated, temperature-controlled and regional solo-driver service; Southern Refrigerated Transport, Inc. (SRT), which provides primarily long haul, regional, dedicated and intermodal temperature-controlled service, and Star Transportation, Inc. (Star), which provides regional solo-driver and dedicated services, primarily in the southeastern United States. The Company provides truckload transportation services throughout the continental United States, into and out of Mexico, and into and out of portions of Canada.

Receive News & Ratings for Union Pacific Corporation Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Union Pacific Corporation and related companies with MarketBeat.com's FREE daily email newsletter.