Top Railroad Stocks for Q4 2021

CP.TO, CSX, and GBX are top for value, growth, and momentum, respectively

The railroad industry is one of the major components of the transportation sector and is closely tied to the economy's growth. Railroad companies operate vast networks that transport agricultural products, packaged foods, commodities, electronics, and other goods to companies and consumers. Major companies in the industry include Union Pacific Corp. (UNP), Norfolk Southern Corp. (NSC), and CSX Corp. (CSX).

The railroad industry does not have its own benchmark, but as a part of the broader transportation sector, its performance can be reasonably approximated by the iShares Transportation Average ETF (IYT). IYT has underperformed the broader market with a total return of 26.0% over the past 12 months, below the Russell 1000's total return of 37.1%. These performance figures and all others below are as of Sept. 10, 2021.

Here are the top 3 railroad stocks with the best value, the fastest growth, and the most momentum.

Best Value Railroad Stocks

These are the railroad stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.

Best Value Railroad Stocks
  Price ($) Market Cap ($B) 12-Month Trailing P/E Ratio
Canadian Pacific Railway Ltd. (CP.TO) CA$86.91 CA$58.0 18.0
CSX Corp. (CSX) 30.95 69.8 20.9
Norfolk Southern Corp. (NSC) 247.15 61.0 22.9

Source: YCharts

  • Canadian Pacific Railway Ltd.: Canadian Pacific Railway is a Canada-based company that offers rail transportation services, including intermodal shipping, rail siding construction, and logistics services. The company has been embroiled in a bidding war with Canadian National Railway Co. (CNR.TO) regarding a potential merger with Kansas City Southern (see below). On Sept. 12, Kansas City Southern announced it planned to accept Canadian Pacific's $27.2 billion cash-and-stock acquisition offer. Canadian National Railway Co. has until Sept. 17 to submit a better offer.
  • CSX Corp.: CSX provides rail transportation across 23 States, the District of Columbia, Ontario, and Quebec. CSX's network has over 20,000 miles of track with access to more than 70 ocean, river, and lake port terminals.
  • Norfolk Southern Corp.: Norfolk Southern is a rail transportation company operating primarily in the Southeast, East, and Midwest. The company transports raw materials, intermediate products, and finished goods. Through agreements with other carriers, it also provides service throughout the U.S., as well as transport of overseas freight.

Fastest Growing Railroad Stocks

These are the top railroad stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company.

On Nov. 15, 2021, President Biden signed into law the Infrastructure Investment and Jobs Act, which will invest approximately $550 billion in America's roads and bridges, water infrastructure, resilience, internet, and more. Of this $550 billion, $66 billion will be allocated to improving America's passenger and freight rail system.

Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.

Fastest Growing Railroad Stocks
  Price ($) Market Cap ($B) EPS Growth (%) Revenue Growth (%)
CSX Corp. (CSX) 30.95 69.8 136.4 32.6
Norfolk Southern Corp. (NSC) 247.15 61.0 114.4 34.2
Canadian Pacific Railway Ltd. (CP.TO) CA$86.91 CA$58.0 100.0 14.6

Source: YCharts

  • CSX Corp.: See company description above.
  • Norfolk Southern Corp.: See company description above.
  • Canadian Pacific Railway Ltd.: See company description above.

Railroad Stocks With the Most Momentum

These are the railroad stocks that had the highest total return over the last 12 months.

Railroad Stocks with the Most Momentum
  Price ($) Market Cap ($B) 12-Month Trailing Total Return (%)
Greenbrier Companies Inc. (GBX) 43.44 1.4 62.7
Kansas City Southern (KSU) 280.00 25.5 52.8
Trinity Industries Inc. (TRN) 28.44 2.8 51.7
Russell 1000 N/A N/A 37.1
iShares Transportation Average ETF (IYT) N/A N/A 26.0

Source: YCharts

  • Greenbrier Companies Inc.: Greenbrier Companies is primarily engaged in the design, manufacture, and marketing of railroad freight car equipment. The company manufactures both railcars and marine vessels, provides repair and refurbishment for intermodal and conventional railcars, and provides complementary leasing and services. On Aug. 26, the company announced that it had received new orders totaling 5,500 units valued at more than $530 million since the start of its Q4 FY 2021 on June 1, 2021.
  • Kansas City Southern: Kansas City Southern is a holding company that, through its subsidiaries, operates a railroad system providing shippers with freight services in commercial and industrial markets in the U.S. and Mexico. See above for details of the proposed merger between Kansas City Southern and Canadian Pacific Railway. In Q2 2021, ending June 30, the company reported a $378.6 million net loss attributable to KSU and subsidiaries, despite a 37% increase in revenue.
  • Trinity Industries Inc.: Trinity Industries is a diversified industrial company. It produces railcars and related parts and provides leasing, management, and maintenance services for railcars. Additionally, Trinity also offers highway products, inland barges, and wind towers.

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Article Sources

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  1. YCharts. "Financial Data." Accessed Sept. 13, 2021.

  2. Reuters. "Kansas City Southern plans to accept Canadian Pacific's $27 bln bid." Accessed Sept. 13, 2021.

  3. CSX. "Company Overview." Accessed Sept. 13, 2021.

  4. The White House. "Updated Fact Sheet: Bipartisan Infrastructure Investment and Jobs Act." Accessed Nov. 23, 2021.

  5. Greenbrier Companies Inc. "Greenbrier Announces Orders for 5,500 Railcars Valued Over $530 Million." Accessed Sept. 13, 2021.

  6. Kansas City Southern. "Kansas City Southern Reports Second Quarter Results." Accessed Sept. 14, 2021.