Contrasting Union Pacific (NYSE:UNP) & West Japan Railway (OTCMKTS:WJRYY)

Union Pacific (NYSE:UNP) and West Japan Railway (OTCMKTS:WJRYY) are both large-cap transportation companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, analyst recommendations, risk, profitability, earnings, valuation and dividends.

Profitability

This table compares Union Pacific and West Japan Railway’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Union Pacific	28.43%	41.73%	10.08%
West Japan Railway	6.66%	9.01%	3.07%

Analyst Ratings

This is a summary of recent ratings and recommmendations for Union Pacific and West Japan Railway, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Union Pacific	1	8	16	2	2.70
West Japan Railway	0	0	0	0	0.00

Union Pacific presently has a consensus price target of $259.46, indicating a potential upside of 15.46%. Given Union Pacific’s stronger consensus rating and higher possible upside, analysts plainly believe Union Pacific is more favorable than West Japan Railway.

Earnings & Valuation

This table compares Union Pacific and West Japan Railway”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Union Pacific	$24.39 billion	5.50	$6.75 billion	$11.51	19.52
West Japan Railway	$11.22 billion	0.92	$752.13 million	$1.59	13.87

Union Pacific has higher revenue and earnings than West Japan Railway. West Japan Railway is trading at a lower price-to-earnings ratio than Union Pacific, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Union Pacific has a beta of 1.05, indicating that its share price is 5% more volatile than the S&P 500. Comparatively, West Japan Railway has a beta of 0.37, indicating that its share price is 63% less volatile than the S&P 500.

Dividends

Union Pacific pays an annual dividend of $5.52 per share and has a dividend yield of 2.5%. West Japan Railway pays an annual dividend of $0.51 per share and has a dividend yield of 2.3%. Union Pacific pays out 48.0% of its earnings in the form of a dividend. West Japan Railway pays out 32.1% 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. Union Pacific has raised its dividend for 18 consecutive years. Union Pacific is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

80.4% of Union Pacific shares are held by institutional investors. 0.3% of Union Pacific shares are held 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.

Summary

Union Pacific beats West Japan Railway on 17 of the 18 factors compared between the two stocks.

About Union Pacific

Union Pacific Corporation, through its subsidiary, Union Pacific Railroad Company, operates in the railroad business in the United States. The company offers transportation services for grain and grain products, fertilizers, food and refrigerated products, and coal and renewables to grain processors, animal feeders, ethanol producers, renewable biofuel producers, and other agricultural users; and construction products, industrial chemicals, plastics, forest products, specialized products, metals and ores, petroleum, liquid petroleum gases, soda ash, and sand, as well as finished automobiles, automotive parts, and merchandise in intermodal containers. Union Pacific Corporation was founded in 1862 and is headquartered in Omaha, Nebraska.

About West Japan Railway

West Japan Railway Company provides railway transport services in Japan. The company operates through Mobility, Retail, Real Estate, Travel and Regional Solutions, and Other segments. The Mobility segment provides passenger transportation, station operation and management, cleaning and maintenance, construction, machinery and equipment installation, rolling stock and other facility construction services, as well as engages in the railway operations and electric works. The Retail segment sells goods; offers food and other wholesale operation services; and operates department stores. The Real Estate segment sells and leases real estate properties, as well as operates shopping centers and hotels. The Travel and Regional Solutions segment provides travel agency and regional solutions. The Other segment engages in the advertising and other businesses. The company is also involved in the operation of convenience stores, restaurants, and souvenir shops; and provision of credit cards and electronic money services. The company was incorporated in 1987 and is based in Osaka, Japan.