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Omaha, Nebraska-based Union Pacific Corporation (UNP) connects 23 states in the western two-thirds of the country by rail, providing a critical link in the global supply chain. With a market cap of $148.3 billion, Union Pacific ships about anything: food, forest products, automobiles, agricultural products, coal, chemicals, and more.
Companies worth $10 billion or more are generally described as "large-cap stocks," and Union Pacific fits this bill perfectly. Given its dominance in the railroad industry, its valuation above this mark is unsurprising. Union Pacific operates through agricultural products, automotive, chemicals, Coal, industrial products, and intermodal segments. It provides value to its roughly 10,000 customers by delivering products in a safe, reliable, fuel-efficient, and environmentally responsible manner.
Despite its strength, the company has hit a rough patch, UNP is currently trading 6.6% below its 52-week high of $258.66 achieved on Feb. 26. Moreover, UNP has dipped around 3.4% over the past three months, underperforming the Industrial Select Sector SPDR Fund’s (XLI) surge of 10.7% during the same time frame.
Union Pacific has underperformed the industrial sector on a longer-term basis as well. UNP stock observed a marginal dip in 2024 and gained nearly 10.5% over the past 52 weeks, compared to XLI’s 26.3% gains on a YTD basis and 36% returns over the past year.
To confirm the bullish trend during the start of the year and recent consolidation, UNP traded mostly above its 50-day and 200-day moving averages until mid-March and late May respectively, and observed notable fluctuations in the following months.
Union Pacific’s stock prices declined nearly 4.4% after its disappointing Q3 earnings release on Oct. 24, despite reporting growth in revenues and earnings. The company saw a 2.5% year-over-year growth in operating revenues, reaching $6.1 billion, but fell short of analysts' expectations due to a less favorable business mix and reduced fuel surcharge revenue. However, Union Pacific achieved significant operational efficiency improvements, with freight car velocity increasing 5% and workforce productivity up 12%, leading to a 310-basis point operating margin expansion to 60.3% and a 9.6% growth in EPS to $2.75.
Union Pacific has lagged behind its competitor CSX Corporation’s (CSX) 5.4% gains on a YTD basis and 15.2% returns over the past 52-week period.
Nevertheless, analysts remain moderately optimistic about UNP’s prospects. Among the 25 analysts covering the stock, the consensus rating is a “Moderate Buy.” As of writing, UNP is trading below the mean price target of $259.84.
