Critical Contrast: Union Pacific (NYSE:UNP) versus Heartland Express (NASDAQ:HTLD)

Heartland Express (NASDAQ:HTLD) and Union Pacific (NYSE:UNP) are both industrials companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, institutional ownership, dividends, valuation and profitability.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Heartland Express and Union Pacific, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Heartland Express	3	3	1	0	1.71
Union Pacific	0	4	15	2	2.90

Heartland Express currently has a consensus target price of $13.00, suggesting a potential upside of 19.71%. Union Pacific has a consensus target price of $325.72, suggesting a potential upside of 15.43%. Given Heartland Express’ higher probable upside, equities research analysts plainly believe Heartland Express is more favorable than Union Pacific.

Earnings & Valuation

This table compares Heartland Express and Union Pacific”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Heartland Express	$805.71 million	1.04	-$52.45 million	($0.28)	-38.79
Union Pacific	$24.51 billion	6.84	$7.14 billion	$12.35	22.85

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

Dividends

Heartland Express pays an annual dividend of $0.08 per share and has a dividend yield of 0.7%. Union Pacific pays an annual dividend of $5.68 per share and has a dividend yield of 2.0%. Heartland Express pays out -28.6% of its earnings in the form of a dividend. Union Pacific pays out 46.0% 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 increased 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.

Risk & Volatility

Heartland Express has a beta of 1.35, indicating that its share price is 35% more volatile than the S&P 500. Comparatively, Union Pacific has a beta of 0.95, indicating that its share price is 5% less volatile than the S&P 500.

Insider and Institutional Ownership

53.4% of Heartland Express shares are held by institutional investors. Comparatively, 80.4% of Union Pacific shares are held by institutional investors. 41.6% of Heartland Express shares are held by insiders. Comparatively, 0.2% of Union Pacific shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Heartland Express and Union Pacific’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Heartland Express	-2.98%	-0.92%	-0.58%
Union Pacific	28.85%	38.46%	10.45%

Summary

Union Pacific beats Heartland Express on 13 of the 17 factors compared between the two stocks.

About Heartland Express

Heartland Express, Inc., together with its subsidiaries, operates as a short-to-medium, and long-haul truckload carrier in the United States and Canada. It primarily provides nationwide asset-based dry van truckload service for shippers; cross-border freight and other transportation services; and temperature-controlled truckload services. The company offers its services under the Heartland Express and Millis Transfer brand names. It primarily serves retailers and manufacturers in consumer goods, appliances, food products, and automotive industries. The company was founded in 1978 and is headquartered in North Liberty, Iowa.

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.