Union Pacific (UNP) AI Stock Analysis

• Market Cap: $139.40B
• Dividend Yield: 2.32%
• Average Volume (3M): 3.24M
• Price to Earnings (P/E): 19.2
• Beta (1Y): 0.64
• Revenue Growth: 1.06%
• EPS Growth: 8.21%
• Country: US
• Employees: 30,146
• Sector: Industrials
• Sector Strength: 72
• Industry: Railroads
• EPS (TTM): 2.86
• Shares Outstanding: 593,391,500
• 10 Day Avg. Volume: 2,943,417
• 30 Day Avg. Volume: 3,237,347
• PEG Ratio: 2.34
• Price to Book (P/B): 7.42
• Price to Sales (P/S): 5.59
• P/FCF Ratio: 24.92
• Enterprise Value/Market Cap: 1.22
• Enterprise Value/Revenue: 6.93
• Enterprise Value/Gross Profit: 15.17
• Enterprise Value/Ebitda: 13.13
• 1Y Price Target: $278.86
• Price Target Upside: 18.70% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 15
• EPS Forecast (FY): 12.47
• Revenue Forecast (FY): $25.33B

• Rating: 73 Outperform
• Price Target: $261.00 ▲(11.10% Upside)
• Action: Upgraded Date: 02/12/26
• Date: Action: Upgraded 02/12/26

The score is driven primarily by strong financial fundamentals (high profitability and solid cash generation) despite leverage and recent top-line weakness. Technicals are supportive with strong trend momentum but look overbought. Valuation is reasonable but not cheap, while the earnings call was constructive on 2026 EPS and operating ratio improvement, tempered by cost inflation, volume/mix headwinds, and merger-related regulatory uncertainty.

Positive Factors

Cash generation & profitability

Union Pacific’s consistent high margins and dependable operating cash flow create durable internal funding for capital expenditure, dividends and strategic investments. Over time steady OCF supports reinvestment in network productivity, funds debt servicing and cushions cyclical freight volatility without relying on external financing.

Operational productivity gains

Sustained improvements in car velocity, terminal dwell and locomotive and workforce productivity indicate structural network efficiency gains. These productivity improvements lower unit costs, increase capacity without proportional capex, and support long-term margin sustainability and service competitiveness across core markets.

ROIC and credit strength

A high ROIC and maintained credit ratings signal disciplined capital allocation and financial resilience. Durable ROIC above cost of capital supports value creation from investments, while a moderate leverage metric (adjusted net debt/EBITDA ~2.7x) preserves access to capital markets for growth or opportunistic investments.

Negative Factors

Recent revenue decline

A meaningful 2025 revenue decline reflects weakening volumes and adverse mix in higher‑yield segments. Persistent top-line compression would erode operating leverage, pressure margins over time, and limit the company’s ability to expand service or invest without offsetting pricing or cost gains.

Capital structure leverage

A debt-heavy capital structure reduces financial flexibility if volumes or cash flow weaken. High leverage increases interest and refinancing risk during downturns, constrains opportunistic investment and has already led management to prioritize debt repayment and conserve cash, limiting shareholder distribution flexibility.

Merger regulatory uncertainty & costs

Regulatory delays and additional filings create protracted uncertainty that affects capital allocation, pauses buybacks and adds near‑term costs. Extended regulatory scrutiny can postpone expected synergies, raise integration expense and force conservative balance sheet management for months to come.

Union Pacific Business Overview & Revenue Model

Company Description

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, and other agricultural users; petroleum, and liquid petroleum gases; and construction products, industrial chemicals, plastics, forest products, specialized products, metals and ores, soda ash, and sand, as well as finished automobiles, automotive parts, and merchandise in intermodal containers. As of December 31, 2021, its rail network included 32,452 route miles connecting Pacific Coast and Gulf Coast ports with the Midwest and Eastern United States gateways. The company was founded in 1862 and is headquartered in Omaha, Nebraska.

How the Company Makes Money

Union Pacific primarily makes money by charging customers to move freight on its rail network. Revenue is generated from contractual transportation rates and related charges tied to shipment volume, distance (miles moved), service type, equipment requirements, and market conditions. Its key revenue streams are freight categories such as: (1) Bulk shipments (e.g., agricultural products and other bulk commodities), (2) Industrial shipments (e.g., construction-related materials, chemicals, plastics, forest products, metals and minerals), and (3) Premium shipments, which typically include intermodal (containerized freight moved in partnership with trucking and ocean carriers) and automotive (finished vehicles and parts). In addition to line-haul transportation, Union Pacific earns revenue from fuel surcharges and accessorial fees (e.g., switching, demurrage/terminal dwell-related charges, storage, and other service-related fees), as well as from various logistics/ancillary services associated with managing and handling freight. A significant factor in how it earns revenue—especially for intermodal and long-distance moves—is interchange and connectivity with other Class I railroads and short-line railroads, plus relationships with trucking carriers and ocean shipping lines that feed or receive containers; these partnerships enable end-to-end routes beyond Union Pacific’s owned track while Union Pacific captures the rail portion of the move. Overall profitability is influenced by pricing discipline, freight mix (higher- vs. lower-yield traffic), network utilization, fuel costs (partly passed through via surcharges), and operating efficiency.

Union Pacific Financial Statement Overview

Summary

Strong profitability and dependable operating cash flow support the score, but it is tempered by a debt-heavy capital structure and a notable 2025 (annual) revenue decline alongside volatile free cash flow.

Income Statement

Union Pacific shows consistently strong profitability, with net margins holding in the high-20% range and solid operating profitability over the period. Revenue was largely stable from 2023–2024 but declined meaningfully in 2025 (annual), which is the key near-term concern. Overall, the business remains highly profitable, but the recent top-line drop reduces the income statement strength versus prior years.

Balance Sheet

The balance sheet is supported by strong returns to shareholders, with return on equity consistently elevated. However, leverage is a notable constraint: debt is high relative to equity (debt-to-equity generally around ~1.7–2.9 across the period). While equity improved versus the 2022 low, the capital structure still leans debt-heavy, which can limit flexibility if operating conditions weaken.

Cash Flow

Cash generation is solid and relatively steady, with operating cash flow consistently covering net income by a comfortable margin across the years shown. Free cash flow remains robust in absolute dollars, though it has been volatile—down in 2023 and again in 2025 (annual) after improving in 2024. Free cash flow conversion to net income is generally moderate (roughly ~0.57–0.67), indicating dependable but not exceptional cash translation after capital spending.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	24.51B	24.25B	24.12B	24.88B	21.80B
Gross Profit	14.55B	11.04B	10.53B	11.21B	10.51B
EBITDA	12.95B	12.50B	11.93B	12.64B	11.84B
Net Income	7.14B	6.75B	6.38B	7.00B	6.52B
Balance Sheet
Total Assets	69.70B	67.72B	67.13B	65.45B	63.52B
Cash, Cash Equivalents and Short-Term Investments	1.52B	1.04B	1.07B	1.02B	1.01B
Total Debt	31.81B	32.46B	34.18B	34.96B	31.49B
Total Liabilities	51.23B	50.83B	52.34B	53.29B	49.36B
Stockholders Equity	18.47B	16.89B	14.79B	12.16B	14.16B
Cash Flow
Free Cash Flow	5.50B	5.89B	4.77B	5.74B	6.10B
Operating Cash Flow	9.29B	9.35B	8.38B	9.36B	9.03B
Investing Cash Flow	-3.76B	-3.33B	-3.67B	-3.47B	-2.71B
Financing Cash Flow	-5.28B	-6.07B	-4.63B	-5.89B	-7.16B

Union Pacific Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 234.92
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For UNP, the sentiment is Negative. The current price of 234.92 is below the 20-day moving average (MA) of 253.25, below the 50-day MA of 245.84, and above the 200-day MA of 229.36, indicating a neutral trend. The MACD of -4.08 indicates Positive momentum. The RSI at 29.25 is Positive, neither overbought nor oversold. The STOCH value of 9.00 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for UNP.

Union Pacific Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CNR	77 Outperform	C$82.81B	16.73	21.95%	2.62%	0.23%	-13.22%
UNP	73 Outperform	$139.40B	19.20	41.95%	2.32%	1.06%	8.21%
CP	70 Outperform	C$96.60B	22.36	8.90%	0.82%	4.02%	21.39%
JBHT	69 Neutral	$18.91B	31.73	16.33%	0.89%	-1.60%	4.87%
NSC	68 Neutral	$63.12B	25.20	19.16%	1.85%	0.48%	22.88%
CSX	67 Neutral	$70.98B	23.39	22.90%	1.42%	-3.80%	-17.32%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%