Union Pacific Stock Fair Value – Union Pacific Corporation: Overvalued and Facing Challenges Ahead
May 24, 2023
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The company is a leading transporter of coal, agricultural products, automotive products, chemicals, and intermodal containers and trailers. While Union Pacific ($NYSE:UNP)’s stock has seen an impressive run-up over the past year, some analysts are warning that the company may be overvalued and facing some headwinds. Recent reports from market analysts have suggested that Union Pacific appears to be overvalued based on their current fundamentals and outlook. The railroad operator faces increasing competition from trucking companies, railroads with lower operating costs, and labor unions fighting for higher wages.
Additionally, Union Pacific has recently been unable to keep up with its peers in terms of capital investments in new equipment, which could hurt their operations in the long run. Given these challenges, investors should be cautious when considering Union Pacific as an investment option. While the company has a long track record of success and remains a leader in the railroad industry, their current valuation and short-term outlook may not be worth the risk. Careful investors should consider the broader implications of Union Pacific’s potential headwinds before making a decision to purchase the stock.
Share Price
Union Pacific Corporation (UNION PACIFIC) has been on a decline in its stock market values lately. On Tuesday, the stock opened at $198.2 and closed at $196.4, down by 1.0% from its prior closing price of 198.3. This marks the fifth straight day of downtrend in their stock market values. The company is facing a number of challenges that could further negatively impact its stock prices. For one, UNION PACIFIC is dealing with increased competition due to the emergence of new transportation companies that are cutting into their market share and profits.
Additionally, there are concerns that the company’s current stock valuation could be too high, making it difficult for UNION PACIFIC to gain back investor confidence. In order to remain competitive and reverse its current trend, UNION PACIFIC must take effective measures to address these challenges. The company must find ways to reduce costs, increase operational efficiency, and capitalize on potential growth opportunities in order to stay ahead of its competitors. Additionally, it must work towards improving its balance sheet by reducing debt and strengthening its equity position. Overall, UNION PACIFIC has been facing a period of decline in its stock prices and needs to take immediate action to address the challenges ahead. If the company is able to implement effective measures to increase profitability and regain investor confidence, it can start to move towards a more positive outlook in the future. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Union Pacific. More…
| Total Revenues | Net Income | Net Margin |
| 25.07k | 7k | 26.7% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Union Pacific. More…
| Operations | Investing | Financing |
| 8.97k | -3.44k | -5.36k |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Union Pacific. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 65.97k | 53.51k | 19.93 |
Key Ratios Snapshot
Some of the financial key ratios for Union Pacific are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 5.2% | 4.0% | 41.5% |
| FCF Margin | ROE | ROA |
| 21.6% | 53.4% | 9.9% |
Analysis – Union Pacific Stock Fair Value
At GoodWhale, we analyze the financials of UNION PACIFIC to determine its intrinsic value. After careful analysis, our proprietary Valuation Line reveals that the intrinsic value of a UNION PACIFIC share is around $258.1. Currently, UNION PACIFIC stock is traded at $196.4, which means it is undervalued by 23.9%. This may be a good time to invest in UNION PACIFIC. More…
Peers
The railroad industry in North America is highly competitive, with Union Pacific Corp (UP) facing off against Canadian Pacific Railway Ltd (CP), CSX Corp (CSX), and Norfolk Southern Corp (NSC) for market share. All four companies are well-positioned to compete for business, and each has its own strengths and weaknesses. UP is the largest railroad in North America, and it has a strong presence in the western United States. CP is the largest railroad in Canada, and it has a strong presence in the eastern United States. CSX is a strong competitor in the eastern United States, while NSC is a strong competitor in the southern United States.
– Canadian Pacific Railway Ltd ($TSX:CP)
Canadian Pacific Railway Ltd. has a market cap of $90.72 billion as of 2022. It has a return on equity of 6.42%. The company operates in the rail transportation industry. It provides freight transportation services in Canada and the United States.
– CSX Corp ($NASDAQ:CSX)
CSX Corporation is an American publicly traded transportation company headquartered in Jacksonville, Florida. The company operates 21,000 route miles of track in 23 states, the District of Columbia, and two Canadian provinces. CSX’s intermodal facilities connect customers to railroads throughout North America.
As of 2022, CSX’s market cap is $57.98 billion and its ROE is 34.03%. The company’s strong financials and large market share make it a transportation industry leader.
– Norfolk Southern Corp ($NYSE:NSC)
Norfolk Southern Corp is a publicly traded company with a market capitalization of $48.12B as of 2022. The company has a strong return on equity of 21.78%. Norfolk Southern is primarily a transportation company that operates in the eastern United States. The company operates railroads and provides related logistics services.
Summary
Union Pacific Corporation is a leading American railroad that operates in the western two-thirds of the United States. Despite being the largest railroad network in the country, investors should be cautious as the company is currently overvalued and facing significant headwinds. The current environment has been impacted by declining coal volumes, an uncertain economic outlook, and weak rail pricing conditions. Meanwhile, the company’s large operating costs, along with increased expenses from its acquisition of the Southern Pacific Railroad, have made for a difficult operating environment.
On top of this, Union Pacific is facing competition from new entrants in the market and an aging railroad infrastructure that needs significant capital investment. All of these factors combined suggest caution is warranted when considering investing in Union Pacific at this time.
