Union Pacific (UNP) AI Stock Analysis

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Union Pacific

(NYSE:UNP)

69Neutral

Union Pacific's overall score of 69 reflects a strong financial foundation and positive corporate actions like the share buyback. However, technical indicators suggest bearish trends, and external economic uncertainties pose risks. The company's valuation is fair, but growth challenges and reliance on debt require close monitoring.

Positive Factors

Financial Stability

Management reaffirmed its target for $4.0-$4.5b share buyback in 2025, indicating confidence in the company's financial stability and outlook.

Pricing and Profitability

Union Pacific posted best core pricing gains in a decade and continued productivity improvements.

Negative Factors

Fuel Revenue Impact

Fuel surcharge was a 275 basis points year-over-year revenue headwind, contributing to a top-line shortfall.

Revenue Performance

Union Pacific’s 1Q EPS of $2.70 fell short of the $2.74 consensus and the $2.78 estimate driven by a lower top line.

Union Pacific (UNP) vs. S&P 500 (SPY)

Market Cap

$131.00B

Dividend Yield2.48%

Average Volume (3M)3.12M

Price to Earnings (P/E)19.7

Beta (1Y)0.77

Revenue Growth0.63%

EPS Growth5.93%

CountryUS

Employees30,146

SectorIndustrials

Sector Strength75

IndustryRailroads

Share Statistics

EPS (TTM)2.91

Shares Outstanding599,318,200

10 Day Avg. Volume4,385,019

30 Day Avg. Volume3,120,935

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)5.83

Price to Cash Flow (P/CF)13.30

P/FCF Ratio13.30

Enterprise Value/Market Cap1.29

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit15.35

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$245.74

Price Target Upside13.95% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering20

Union Pacific Business Overview & Revenue Model

Company DescriptionUnion 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 MoneyUnion Pacific generates revenue primarily through its freight rail transportation services. The company's key revenue streams include the transportation of agricultural products, automotive goods, chemicals, coal, industrial products, and intermodal containers. Union Pacific charges its customers based on the volume and weight of goods transported, as well as the distance traveled. The company benefits from long-term contracts with major industrial clients and partnerships with shipping companies to facilitate intermodal transportation, which involves the movement of goods in containers that can be transferred between different modes of transportation. Additionally, Union Pacific invests in technology and infrastructure improvements to enhance operational efficiency and drive profitability. The company is also influenced by factors such as fuel surcharges, pricing strategies, and economic conditions in the sectors it serves.

Union Pacific Key Performance Indicators (KPIs)

Any

Locomotive Productivity

Locomotive Productivity
Assesses the efficiency of locomotive use, revealing how well assets are utilized to maximize output and minimize costs, impacting overall profitability.

Chart InsightsUnion Pacific's locomotive productivity has shown a notable recovery from its 2022 lows, rebounding to pre-pandemic levels by late 2023. This improvement suggests operational efficiencies are being realized, potentially driven by strategic investments in technology and infrastructure. However, the slight dip in early 2024 indicates ongoing challenges, possibly from supply chain disruptions or workforce constraints. Investors should monitor how these factors influence future productivity gains and the company's ability to sustain its operational momentum.

Data provided by:

Main Street Data

Union Pacific Financial Statement Overview

Summary

Union Pacific presents a strong financial position with solid profitability and cash flow metrics. Income statement shows robust margins, balance sheet indicates moderate leverage, and cash flows are strong. However, revenue growth inconsistency and reliance on debt are points to monitor.

Income Statement

Positive

Union Pacific shows strong profitability with a consistent gross profit margin and net profit margin. The TTM gross profit margin is 45.57%, and the net profit margin is 28.02%, indicating efficient cost management. However, revenue growth has been somewhat inconsistent, with a slight decline in the latest period compared to previous years. Despite this, EBIT and EBITDA margins remain robust, highlighting stable operational efficiency.

Balance Sheet

Positive

The company's balance sheet reflects moderate leverage, with a debt-to-equity ratio of 0.19 in the TTM period. ROE is strong at 31.84%, indicating effective use of equity. However, the equity ratio of 23.42% suggests a reliance on debt financing. Overall, the balance sheet shows a mix of strengths in profitability but potential risk from leverage.

Cash Flow

Very Positive

Union Pacific's cash flow is robust, with a TTM free cash flow of $4.57 billion, reflecting strong cash generation. The operating cash flow to net income ratio is 1.41, demonstrating efficient conversion of profits to cash. The free cash flow to net income ratio is favorable at 0.90, indicating healthy cash retention post-capital expenditures.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
24.25B	24.12B	24.88B	21.80B	19.53B
	Gross Profit
11.04B	10.53B	11.21B	10.51B	9.18B
	EBIT
9.71B	9.08B	9.92B	9.34B	7.83B
	EBITDA
12.46B	11.93B	12.64B	11.84B	10.33B
	Net Income Common Stockholders
6.75B	6.38B	7.00B	6.52B	5.35B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.04B	1.07B	1.02B	1.01B	1.86B
	Total Assets
67.72B	67.13B	65.45B	63.52B	62.40B
	Total Debt
32.12B	34.18B	34.63B	31.16B	28.01B
	Net Debt
31.10B	33.12B	33.65B	30.20B	26.21B
	Total Liabilities
50.83B	52.34B	53.29B	49.36B	45.44B
	Stockholders Equity
16.89B	14.79B	12.16B	14.16B	16.96B
Cash Flow		Free Cash Flow
5.89B	4.77B	5.74B	6.10B	5.61B
	Operating Cash Flow
9.35B	8.38B	9.36B	9.03B	8.54B
	Investing Cash Flow
-3.33B	-3.67B	-3.47B	-2.71B	-2.68B
	Financing Cash Flow
-6.07B	-4.63B	-5.89B	-7.16B	-4.90B

Union Pacific Technical Analysis

Technical Analysis Sentiment

Negative

Last Price215.66

Price Trends

50DMA

231.33

Negative

100DMA

233.47

Negative

200DMA

236.44

Negative

Market Momentum

MACD

-4.73

Negative

RSI

42.21

Neutral

STOCH

42.56

Neutral

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 215.66 is below the 20-day moving average (MA) of 217.94, below the 50-day MA of 231.33, and below the 200-day MA of 236.44, indicating a bearish trend. The MACD of -4.73 indicates Negative momentum. The RSI at 42.21 is Neutral, neither overbought nor oversold. The STOCH value of 42.56 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for UNP.

Union Pacific Risk Analysis

Union Pacific disclosed 19 risk factors in its most recent earnings report. Union Pacific reported the most risks in the “Macro & Political” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Union Pacific Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FAST	77 Outperform	$46.45B	40.39	32.35%	1.99%	3.08%	-0.76%
NSC	73 Outperform	$49.99B	15.14	24.52%	2.42%	0.70%	135.08%
UPS	72 Outperform	$80.81B	13.90	35.96%	6.75%	1.36%	-0.76%
CSX	70 Outperform	$52.36B	16.61	26.13%	1.75%	-2.39%	-7.80%
ODFL	70 Outperform	$31.61B	27.95	26.59%	0.71%	-2.63%	-6.12%
UNP	69 Neutral	$131.00B	19.72	42.47%	2.48%	0.63%	5.93%
Sector *	63 Neutral	$4.23B	11.54	5.34%	209.77%	4.14%	-9.49%

* Industrials Sector Average

Performance Comparison

UNP

Union Pacific

215.66

-16.80

-7.23%

CSX

28.07

-5.02

-15.17%

FAST

Fastenal Company

80.97

14.36

21.56%

NSC

Norfolk Southern

224.05

-5.97

-2.60%

ODFL

Old Dominion Freight

153.28

-29.09

-15.95%

UPS

United Parcel

95.30

-44.72

-31.94%

Union Pacific Earnings Call Summary

Earnings Call Date:Apr 24, 2025

(Q1-2025)

% Change Since: -1.87%|

Next Earnings Date:Jul 17, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mix of positive operational performance and pricing gains, offset by flat earnings, business mix challenges, and significant uncertainties in the economic environment and international trade. While the company achieved record operational metrics and maintained strong shareholder returns, the future outlook remains uncertain due to external factors.

Q1-2025 Updates

Positive Updates

Record First Quarter Operating Performance

Union Pacific reported record first quarter operating performance, with the strongest carload growth among Class 1s, and freight revenue growth of 1%. Excluding the impact from fuel surcharge, freight revenue increased 4%, both first quarter records.

Strong Core Pricing Gains

The company achieved the highest core pricing gains in over ten years, driving a 4% increase in freight revenue excluding fuel surcharges.

Cash from Operations and Shareholder Returns

First quarter cash from operations totaled $2.2 billion, up 4% versus last year. The company initiated an accelerated share repurchase program for $1.5 billion and returned $2.5 billion to shareholders in the first quarter.

Improvements in Operational Metrics

Freight car velocity improved 6% to 215 miles per day, and terminal dwell improved 6% year over year. The company achieved record workforce productivity, limiting first quarter cost per employee to a 2% increase.

New Business Developments

Union Pacific secured new business, including onboarding a new coal customer and maintaining an open pipeline of 200 construction projects for future growth.

Negative Updates

Flat Earnings and Operating Income

First quarter 2025 earnings per share of $2.70 and net income of $1.6 billion were essentially flat versus last year, impacted by a $0.19 or 7% headwind from fuel and the leap year.

Business Mix Challenges

Quarterly business mix combined with price resulted in a 250 basis point drag on freight revenue, with lower volumes in higher revenue per car businesses such as petroleum, soda ash, and finished vehicles.

Uncertain Economic and Market Conditions

The company noted significant uncertainties related to tariffs, the economy, consumer behavior, and interest rates, impacting the predictability of future performance.

Potential Impact of International Trade Tariffs

Concerns about the impact of tariffs on Chinese goods and potential changes in international trade dynamics, particularly affecting West Coast import demand.

Company Guidance

During Union Pacific Corporation's first quarter 2025 earnings call, the company provided several key metrics and guidance. The operating ratio remained flat year-over-year at 60.7%, despite a 90 basis point headwind from fuel and leap year impacts. Earnings per share for the quarter were $2.70, reflecting a $0.19 impact from fuel and leap year. Net income was $1.6 billion, consistent with the previous year. Freight revenue increased by 1% and 4% when excluding fuel surcharge impacts, both setting first-quarter records. Strong core pricing gains and a 7% volume growth were highlighted, although challenges persisted due to business mix and fuel costs. Looking ahead, Union Pacific aims to maintain its focus on service and operational excellence, with expectations of EPS growth consistent with their three-year CAGR target of high single to low double digits, despite uncertainties in the marketplace.

Union Pacific Corporate Events

Stock Buyback

Union Pacific Launches $1.5 Billion Share Buyback

Positive

Feb 18, 2025

On February 14, 2025, Union Pacific Corporation initiated accelerated share repurchase programs with Barclays Bank and Citibank to buy back $1.5 billion worth of its common stock. The transaction is expected to conclude by the end of the third quarter of 2025, with approximately 4.8 million shares initially received on February 18, 2025, impacting the company’s financial structure and market perception.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.