Covenant Transportation Group (NASDAQ: CVTI) and Kansas City Southern (NYSE:KSU) are both industrials companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, valuation, risk, profitability and institutional ownership.

Insider and Institutional Ownership

63.3% of Covenant Transportation Group shares are held by institutional investors. Comparatively, 83.6% of Kansas City Southern shares are held by institutional investors. 35.2% of Covenant Transportation Group shares are held by insiders. Comparatively, 1.0% of Kansas City Southern shares are held 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.

Dividends

Kansas City Southern pays an annual dividend of $1.44 per share and has a dividend yield of 1.3%. Covenant Transportation Group does not pay a dividend. Kansas City Southern pays out 28.3% of its earnings in the form of a dividend. Kansas City Southern has increased its dividend for 4 consecutive years.

Volatility and Risk

Covenant Transportation Group has a beta of 1.68, meaning that its stock price is 68% more volatile than the S&P 500. Comparatively, Kansas City Southern has a beta of 0.87, meaning that its stock price is 13% less volatile than the S&P 500.

Profitability

This table compares Covenant Transportation Group and Kansas City Southern’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Covenant Transportation Group 1.82% 5.30% 2.02%
Kansas City Southern 21.42% 11.86% 5.88%

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Covenant Transportation Group and Kansas City Southern, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Covenant Transportation Group 0 1 1 0 2.50
Kansas City Southern 0 7 9 0 2.56

Covenant Transportation Group currently has a consensus price target of $25.25, indicating a potential downside of 9.79%. Kansas City Southern has a consensus price target of $112.20, indicating a potential upside of 1.63%. Given Kansas City Southern’s stronger consensus rating and higher possible upside, analysts plainly believe Kansas City Southern is more favorable than Covenant Transportation Group.

Valuation and Earnings

This table compares Covenant Transportation Group and Kansas City Southern’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Covenant Transportation Group $670.65 million 0.76 $16.83 million $0.66 42.41
Kansas City Southern $2.33 billion 4.90 $478.10 million $5.09 21.69

Kansas City Southern has higher revenue and earnings than Covenant Transportation Group. Kansas City Southern 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.

Summary

Kansas City Southern beats Covenant Transportation Group on 13 of the 17 factors compared between the two stocks.

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.

About Kansas City Southern

Kansas City Southern (KCS) is a holding company. The Company has domestic and international rail operations in North America that are focused on the north/south freight corridor connecting commercial and industrial markets in the central United States with industrial cities in Mexico. The Company’s subsidiaries include The Kansas City Southern Railway Company (KCSR) and Kansas City Southern de Mexico, S.A. de C.V. (KCSM). KCSR serves a 10-state region in the midwest and southeast regions of the United States and has the north/south rail route between Kansas City, Missouri and various ports along the Gulf of Mexico in Alabama, Louisiana, Mississippi and Texas. KCSM operates a corridor of the Mexican railroad system. KCSM’s rail lines provide rail access to the United States and Mexico border crossing at Nuevo Laredo, Tamaulipas. KCSM also provides rail access to the Port of Lazaro Cardenas on the Pacific Ocean.

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