Norfolk Southern (NYSE:NSC) and Guangshen Railway (OTCMKTS:GSHHY) are both transportation companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, analyst recommendations, profitability, dividends, institutional ownership, earnings and valuation.
Profitability
This table compares Norfolk Southern and Guangshen Railway’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Norfolk Southern | 20.27% | 15.83% | 6.26% |
| Guangshen Railway | -3.40% | -2.18% | -1.72% |
Dividends
Norfolk Southern pays an annual dividend of $3.76 per share and has a dividend yield of 1.6%. Guangshen Railway pays an annual dividend of $0.36 per share and has a dividend yield of 4.1%. Norfolk Southern pays out 36.4% of its earnings in the form of a dividend. Norfolk Southern has increased its dividend for 2 consecutive years.
Risk & Volatility
Norfolk Southern has a beta of 1.41, indicating that its stock price is 41% more volatile than the S&P 500. Comparatively, Guangshen Railway has a beta of 0.67, indicating that its stock price is 33% less volatile than the S&P 500.
Insider and Institutional Ownership
62.3% of Norfolk Southern shares are held by institutional investors. Comparatively, 0.6% of Guangshen Railway shares are held by institutional investors. 0.3% of Norfolk Southern shares are held by insiders. Comparatively, 71.4% of Guangshen Railway shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Analyst Ratings
This is a summary of recent recommendations and price targets for Norfolk Southern and Guangshen Railway, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Norfolk Southern | 2 | 7 | 13 | 1 | 2.57 |
| Guangshen Railway | 0 | 0 | 0 | 0 | N/A |
Norfolk Southern presently has a consensus price target of $216.09, indicating a potential downside of 7.81%. Given Norfolk Southern’s higher possible upside, equities analysts clearly believe Norfolk Southern is more favorable than Guangshen Railway.
Earnings and Valuation
This table compares Norfolk Southern and Guangshen Railway’s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Norfolk Southern | $11.30 billion | 5.69 | $2.72 billion | $10.34 | 22.67 |
| Guangshen Railway | $3.04 billion | 0.41 | $107.51 million | N/A | N/A |
Norfolk Southern has higher revenue and earnings than Guangshen Railway.
Summary
Norfolk Southern beats Guangshen Railway on 13 of the 16 factors compared between the two stocks.
About Norfolk Southern
Norfolk Southern Corporation, together with its subsidiaries, engages in the rail transportation of raw materials, intermediate products, and finished goods in the United States. The company transports industrial products, including chemicals, agriculture, and metals and construction materials; and coal, automobiles, and automotive parts. It also transports overseas freight through various Atlantic and Gulf Coast ports; and provides commuter passenger services. As of December 31, 2019, the company operated approximately 19,500 route miles in 22 states and the District of Columbia. Norfolk Southern Corporation was incorporated in 1980 and is based in Norfolk, Virginia.
About Guangshen Railway
Guangshen Railway Company Limited engages in the railway passenger and freight transportation business in the People's Republic of China. The company's passenger transportation services include the operation of Guangzhou-Shenzhen inter-city express trains, long-distance trains, and Guangzhou-Hong Kong city through trains. Its freight transportation services comprise the transportation of full load and single load cargo, containers, bulky and heavy cargo, dangerous goods, perishable goods, and oversized cargo. The company also provides railway network usage services; and other transportation-related services, such as railway operation, locomotive and passenger car leasing, passenger service, and luggage transportation services, as well as sells food, beverages, and merchandise on board the trains and in railway stations. In addition, it is involved in train repair, on-board catering, materials and supplies sale, goods sale, cargo loading and unloading, and other businesses related to railway transportation. Further, the company offers warehousing, hotel management, and real estate construction services. As of December 31, 2019, it operated 246.5 pairs of passenger trains on a daily basis, including 105 pairs of Guangzhou-Shenzhen inter-city trains, 10 pairs of Hong Kong through Trains, and 131.5 pairs of long-distance trains. The company was founded in 1996 and is based in Shenzhen, the People's Republic of China.