Financial Review: CENT JAPAN RWY/ADR (CJPRY) vs. Kansas City Southern (KSU)

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Kansas City Southern (NYSE:KSU) and CENT JAPAN RWY/ADR (OTCMKTS:CJPRY) are both transportation companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, earnings, valuation, risk, analyst recommendations, profitability and institutional ownership.

Profitability

This table compares Kansas City Southern and CENT JAPAN RWY/ADR’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kansas City Southern 37.98% 11.98% 6.43%
CENT JAPAN RWY/ADR 21.79% 14.12% 4.89%

Dividends

Kansas City Southern pays an annual dividend of $1.44 per share and has a dividend yield of 1.5%. CENT JAPAN RWY/ADR pays an annual dividend of $0.10 per share and has a dividend yield of 0.5%. Kansas City Southern pays out 27.4% of its earnings in the form of a dividend. CENT JAPAN RWY/ADR pays out 5.2% 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. Kansas City Southern has increased its dividend for 4 consecutive years. Kansas City Southern is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current ratings and price targets for Kansas City Southern and CENT JAPAN RWY/ADR, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kansas City Southern 0 2 8 1 2.91
CENT JAPAN RWY/ADR 0 0 0 0 N/A

Kansas City Southern currently has a consensus target price of $126.73, indicating a potential upside of 32.49%. Given Kansas City Southern’s higher probable upside, equities analysts plainly believe Kansas City Southern is more favorable than CENT JAPAN RWY/ADR.

Earnings and Valuation

This table compares Kansas City Southern and CENT JAPAN RWY/ADR’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Kansas City Southern $2.58 billion 3.77 $962.00 million $5.25 18.22
CENT JAPAN RWY/ADR $16.45 billion 2.55 $3.56 billion $1.92 10.63

CENT JAPAN RWY/ADR has higher revenue and earnings than Kansas City Southern. CENT JAPAN RWY/ADR is trading at a lower price-to-earnings ratio than Kansas City Southern, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Kansas City Southern has a beta of 0.83, indicating that its share price is 17% less volatile than the S&P 500. Comparatively, CENT JAPAN RWY/ADR has a beta of 0.57, indicating that its share price is 43% less volatile than the S&P 500.

Insider & Institutional Ownership

87.1% of Kansas City Southern shares are held by institutional investors. Comparatively, 0.1% of CENT JAPAN RWY/ADR shares are held by institutional investors. 0.7% of Kansas City Southern shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

Kansas City Southern beats CENT JAPAN RWY/ADR on 13 of the 17 factors compared between the two stocks.

About Kansas City Southern

Kansas City Southern, through its subsidiaries, provides domestic and international rail transportation services in North America. It serves a ten-state region in the midwest and southeast regions of the United States and has the shortest north/south rail route between Kansas City, Missouri, and ports along the Gulf of Mexico in Alabama, Louisiana, Mississippi, and Texas. The company operates a commercial corridor of the Mexican railroad system and has its direct rail passageway between Mexico City and Laredo, Texas. It provides rail access to the United States and Mexico border crossing at Nuevo Laredo, Tamaulipas; and controls and operates the southern half of the rail bridge at Laredo, Texas, as well as the northern half of this bridge. The company also provides rail access to the port of Lazaro Cardenas on the Pacific Ocean; and owns a 157-mile rail line extending from Laredo, Texas to the port city of Corpus Christi, Texas. Its rail network comprises approximately 6,700 route miles. The company serves the chemical and petroleum, industrial and consumer products, agriculture and minerals, energy, intermodal, and automotive markets. Kansas City Southern was founded in 1887 and is based in Kansas City, Missouri.

About CENT JAPAN RWY/ADR

Central Japan Railway Company engages in the railway and related businesses in Japan. The company operates through Transportation, Merchandise and Other, Real Estate, and Other segments. It primarily operates Tokaido Shinkansen, a transportation artery that links metropolitan areas of Tokyo, Nagoya, and Osaka, as well as operates a network of 12 conventional lines centered on the Nagoya and Shizuoka areas. The company also provides transportation, bus, logistics, travel agency, advertising, linen supply, track maintenance and inspection, construction and construction consulting, and contracted accounting and financial services; and manufactures, maintains, and repairs railway rolling stock and machinery. In addition, it is involved in the department store operation; wholesale and retail sales business; food and beverage sales; real estate leasing and sales; hotel business; and development, improvement, and maintenance of computer systems. Central Japan Railway Company was founded in 1987 and is headquartered in Nagoya, Japan.

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