It's certainly a stark looking chart when you compare the outperformance of rail freight operator Aurizon Holdings Ltd (ASX: AZJ) since its listing in December 2010 with the underperformance of freight and logistics operator Toll Holdings Limited (ASX: TOL).
Over the period since listing, Aurizon's share price has soared 80%, while the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) has gained 18% and Toll's shares have fallen 15%. Shareholders in Toll would not be pleased!
Despite the disappointing past performance of Toll, the future could see quite different results. Here are three reasons why Toll could be the better bet going forward.
- Toll has been languishing in a difficult economic environment over the past few years, but is now arguably at a point where its earnings may begin to improve. Aurizon on the other hand looks to be facing the opposite set of circumstances. Aurizon has been riding high on the back of a booming commodity industry, however is appears the resources downturn is now starting to bite. In late June the group announced further reforms to its business and stated that subdued market conditions would lead to additional asset impairments.
- When it comes to valuation Toll's stock is trading on an appealing forecast FY 2015 price-to-earnings (PE) ratio of 12.8. In comparison Aurizon is trading on a forecast PE of 17.3 (according to data supplied by Morningstar).
- The yield picture also favours Toll. Consensus forecasts suggest Toll is trading on a lofty FY 2015 dividend yield of 5.6%. In comparison Aurizon has a forecast yield of just 3.7%.
