Critical Analysis: Union Pacific (UNP) and Greenbrier Companies, Inc. (The) (GBX)

Greenbrier Companies, Inc. (The) (NYSE: GBX) and Union Pacific (NYSE:UNP) are both transportation companies, but which is the superior stock? We will compare the two businesses based on the strength of their valuation, institutional ownership, profitabiliy, analyst recommendations, earnings, dividends and risk.

Dividends

Greenbrier Companies, Inc. (The) pays an annual dividend of $0.88 per share and has a dividend yield of 1.9%. Union Pacific pays an annual dividend of $2.42 per share and has a dividend yield of 2.2%. Greenbrier Companies, Inc. (The) pays out 21.7% of its earnings in the form of a dividend. Union Pacific pays out 46.2% 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. Greenbrier Companies, Inc. (The) has raised its dividend for 7 consecutive years.

Volatility & Risk

Greenbrier Companies, Inc. (The) has a beta of 2, meaning that its stock price is 100% more volatile than the S&P 500. Comparatively, Union Pacific has a beta of 0.84, meaning that its stock price is 16% less volatile than the S&P 500.

Institutional and Insider Ownership

79.3% of Union Pacific shares are owned by institutional investors. 4.6% of Greenbrier Companies, Inc. (The) shares are owned by insiders. Comparatively, 0.2% of Union Pacific shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Greenbrier Companies, Inc. (The) and Union Pacific’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Greenbrier Companies, Inc. (The) 5.52% 12.41% 6.76%
Union Pacific 20.89% 21.69% 7.70%

Analyst Recommendations

This is a summary of current ratings and price targets for Greenbrier Companies, Inc. (The) and Union Pacific, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Greenbrier Companies, Inc. (The) 2 4 3 0 2.11
Union Pacific 0 8 10 1 2.63

Greenbrier Companies, Inc. (The) presently has a consensus target price of $46.00, indicating a potential downside of 3.06%. Union Pacific has a consensus target price of $109.78, indicating a potential upside of 1.55%. Given Union Pacific’s stronger consensus rating and higher probable upside, analysts plainly believe Union Pacific is more favorable than Greenbrier Companies, Inc. (The).

Valuation and Earnings

This table compares Greenbrier Companies, Inc. (The) and Union Pacific’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Greenbrier Companies, Inc. (The) $2.33 billion 0.58 $379.94 million $4.06 11.69
Union Pacific $20.24 billion 4.31 $9.43 billion $5.24 20.63

Union Pacific has higher revenue and earnings than Greenbrier Companies, Inc. (The). Greenbrier Companies, Inc. (The) is trading at a lower price-to-earnings ratio than Union Pacific, indicating that it is currently the more affordable of the two stocks.

Summary

Union Pacific beats Greenbrier Companies, Inc. (The) on 14 of the 18 factors compared between the two stocks.

Greenbrier Companies, Inc. (The) Company Profile

The Greenbrier Companies, Inc. is a designer, manufacturer and marketer of railroad freight car equipment in North America and Europe; a manufacturer and marketer of marine barges in North America; a provider of wheel services, parts, leasing and other services to the railroad and related transportation industries in North America, and a provider of railcar repair, refurbishment and retrofitting services in North America through a joint venture partnership. It operates in four segments: Manufacturing; Wheels & Parts; Leasing & Services, and GBW Joint Venture. It also produces rail castings and tank heads through unconsolidated joint ventures. It operates an integrated business model in North America that combines freight car manufacturing, wheel services, repair, refurbishment, retrofitting, component parts, leasing and fleet management services. Its customers include railroads, leasing companies, financial institutions, shippers, carriers and transportation companies.

Union Pacific 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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