Back to top

Image: Bigstock

NSC or CNI: Which Is the Better Value Stock Right Now?

Read MoreHide Full Article

Investors interested in Transportation - Rail stocks are likely familiar with Norfolk Southern (NSC - Free Report) and Canadian National (CNI - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, both Norfolk Southern and Canadian National are sporting a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one piece of the puzzle for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

NSC currently has a forward P/E ratio of 18.77, while CNI has a forward P/E of 21.66. We also note that NSC has a PEG ratio of 1.56. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CNI currently has a PEG ratio of 2.32.

Another notable valuation metric for NSC is its P/B ratio of 2.86. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, CNI has a P/B of 4.87.

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

Both NSC and CNI are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that NSC is the superior value option right now.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Canadian National Railway Company (CNI) - free report >>

Norfolk Southern Corporation (NSC) - free report >>