Canadian Pacific Kansas City (NYSE:CP) versus Covenant Logistics Group (NYSE:CVLG) Critical Review

Covenant Logistics Group (NYSE:CVLG) and Canadian Pacific Kansas City (NYSE:CP) are both industrials companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, profitability, dividends, earnings and analyst recommendations.

Profitability

This table compares Covenant Logistics Group and Canadian Pacific Kansas City’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Covenant Logistics Group	0.42%	9.64%	3.85%
Canadian Pacific Kansas City	24.14%	9.27%	4.96%

Risk & Volatility

Covenant Logistics Group has a beta of 1.44, indicating that its stock price is 44% more volatile than the S&P 500. Comparatively, Canadian Pacific Kansas City has a beta of 1.06, indicating that its stock price is 6% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations and price targets for Covenant Logistics Group and Canadian Pacific Kansas City, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Covenant Logistics Group	0	2	4	1	2.86
Canadian Pacific Kansas City	0	4	12	1	2.82

Covenant Logistics Group currently has a consensus price target of $53.20, suggesting a potential upside of 62.34%. Canadian Pacific Kansas City has a consensus price target of $112.58, suggesting a potential upside of 20.12%. Given Covenant Logistics Group’s stronger consensus rating and higher possible upside, equities analysts plainly believe Covenant Logistics Group is more favorable than Canadian Pacific Kansas City.

Insider and Institutional Ownership

83.7% of Covenant Logistics Group shares are held by institutional investors. Comparatively, 72.2% of Canadian Pacific Kansas City shares are held by institutional investors. 36.7% of Covenant Logistics Group shares are held by insiders. Comparatively, 0.0% of Canadian Pacific Kansas City shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Covenant Logistics Group and Canadian Pacific Kansas City”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Covenant Logistics Group	$1.16 billion	0.71	$7.24 million	$0.16	204.82
Canadian Pacific Kansas City	$10.79 billion	7.56	$2.96 billion	$3.12	30.04

Canadian Pacific Kansas City has higher revenue and earnings than Covenant Logistics Group. Canadian Pacific Kansas City is trading at a lower price-to-earnings ratio than Covenant Logistics Group, indicating that it is currently the more affordable of the two stocks.

Dividends

Covenant Logistics Group pays an annual dividend of $0.28 per share and has a dividend yield of 0.9%. Canadian Pacific Kansas City pays an annual dividend of $0.77 per share and has a dividend yield of 0.8%. Covenant Logistics Group pays out 175.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Canadian Pacific Kansas City pays out 24.7% of its earnings in the form of a dividend. Covenant Logistics Group has raised its dividend for 1 consecutive years. Covenant Logistics Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Covenant Logistics Group beats Canadian Pacific Kansas City on 9 of the 17 factors compared between the two stocks.

About Covenant Logistics Group

Covenant Logistics Group, Inc. is a transportation and logistics company headquartered in Chattanooga, Tennessee. Founded in 1986, it provides truckload transportation and related services to customers across a range of industries. The company’s services include expedited and dedicated truckload transportation, freight brokerage, managed transportation and warehousing. Its operations primarily serve customers in the United States, with transportation services also extending into Canada and Mexico.

About Canadian Pacific Kansas City

Canadian Pacific Kansas City Limited (NYSE: CP), known as CPKC, operates a transcontinental freight railway. Its network connects Canada, the United States and Mexico, providing rail transportation and related logistics services for businesses across North America. CPKC carries a range of goods, including grain and other agricultural products, intermodal freight, automotive shipments, energy products, chemicals, forest products and industrial materials. Its services include rail freight transportation, intermodal shipping and logistics solutions.