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NSC vs. UNP: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Transportation - Rail sector might want to consider either Norfolk Southern (NSC - Free Report) or Union Pacific (UNP - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Norfolk Southern and Union Pacific are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that NSC's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

NSC currently has a forward P/E ratio of 17.73, while UNP has a forward P/E of 18.51. We also note that NSC has a PEG ratio of 1.48. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. UNP currently has a PEG ratio of 1.74.

Another notable valuation metric for NSC is its P/B ratio of 2.62. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, UNP has a P/B of 4.46.

These are just a few of the metrics contributing to NSC's Value grade of B and UNP's Value grade of C.

NSC stands above UNP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that NSC is the superior value option right now.


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