Canadian Pacific Railway vs Canadian National Railway Which Is a Better Investment?

Canadian Pacific Railway (CP) and Canadian National Railway (CN) are two of Canada's largest and most prominent railway companies. Both companies have a long history of serving the transportation needs of Canadians and have established themselves as key players in the country's economy. Investors often compare the stocks of CP and CN, seeking to capitalize on the growth potential of the railway industry. This article will analyze the financial performance, market position, and growth prospects of CP and CN stocks to help investors make informed decisions.

Canadian Pacific Railway or Canadian National Railway?

When comparing Canadian Pacific Railway and Canadian National Railway, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Canadian Pacific Railway and Canadian National Railway.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Canadian Pacific Railway has a dividend yield of 0.76%, while Canadian National Railway has a dividend yield of 2.37%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Canadian Pacific Railway reports a 5-year dividend growth of -21.46% year and a payout ratio of 20.03%. On the other hand, Canadian National Railway reports a 5-year dividend growth of 10.82% year and a payout ratio of 36.38%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Canadian Pacific Railway P/E ratio at 27.88 and Canadian National Railway's P/E ratio at 16.12. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Canadian Pacific Railway P/B ratio is 2.24 while Canadian National Railway's P/B ratio is 4.82.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Canadian Pacific Railway has seen a 5-year revenue growth of 0.31%, while Canadian National Railway's is 0.31%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Canadian Pacific Railway's ROE at 8.22% and Canadian National Railway's ROE at 27.10%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $74.30 for Canadian Pacific Railway and $103.82 for Canadian National Railway. Over the past year, Canadian Pacific Railway's prices ranged from $72.29 to $91.58, with a yearly change of 26.68%. Canadian National Railway's prices fluctuated between $103.82 and $134.02, with a yearly change of 29.09%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.