Don't Take a Position in UNP Before Reading This!

We've been asking ourselves recently if the market has placed a fair valuation on Union Pacific. Let's dive into some of the fundamental values of this large-cap Industrials company to determine if there might be an opportunity here for value-minded investors.

Union Pacific's Valuation Is in Line With Its Sector Averages:

Union Pacific Corporation, through its subsidiary, Union Pacific Railroad Company, operates in the railroad business in the United States. The company belongs to the Industrials sector, which has an average price to earnings (P/E) ratio of 20.49 and an average price to book (P/B) ratio of 3.78. In contrast, Union Pacific has a trailing 12 month P/E ratio of 21.2 and a P/B ratio of 9.63.

Union Pacific's PEG ratio is 4.16, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.

EPS Trend Sustained Primarily by Reducing the Number of Shares Outstanding:

2018 2019 2020 2021 2022 2023
Revenue (MM) $22,832 $21,708 $19,533 $21,804 $24,875 $24,140
Gross Margins 37% 39% 40% 43% 40% 38%
Operating Margins 37% 39% 40% 43% 40% 38%
Net Margins 26% 27% 27% 30% 28% 26%
Net Income (MM) $5,966 $5,919 $5,349 $6,523 $6,998 $6,365
Net Interest Expense (MM) $870 $1,050 $1,141 $1,157 $1,271 $1,342
Depreciation & Amort. (MM) $2,191 $2,216 $2,210 $2,208 $2,246 $2,298
Earnings Per Share $7.91 $8.38 $7.88 $9.95 $11.21 $10.41
Diluted Shares (MM) 754 706 679 655 624 573
The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.