Reasonable P/E Ratio
Strong Gross Profit Margin
High Return on Equity
Strong Net Profit Margin
Strong Interest Coverage
Positive Free Cash Flow
🏆 Strong Operating Performance
🔒 Competitive Advantages
🚀 Growth Initiatives
🌍 Positive Market Outlook
High Price to Sales Ratio
Elevated EV/EBITDA Ratio
Moderate Operating Profit Margin
High Debt Levels
Low Liquidity Ratios
📉 Business Mix Challenges
⚠️ Economic Uncertainties
Union Pacific demonstrates strong business quality through its operational efficiencies and competitive advantages, but faces challenges with a mixed business environment. The future looks promising with significant capital investment and growth initiatives, albeit tempered by economic uncertainties.
Analysis Date: January 23, 2025
Last Updated: March 12, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$309.17
Current Market Price: $211.54
IV/P Ratio: 1.46x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
32.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for UNP
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (19.10)
P/B ratio ≤ 1.5 (7.63)
Current ratio ≥ 2.0 (0.77x)
Long-term debt < Net current assets (-24.89x)
Margin of safety (32.0%)
UNP does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
A return on equity of 41.12% indicates that UNP is efficient in generating profits from its equity, demonstrating strong profitability.
With a net profit margin of 27.82%, UNP is able to retain a significant portion of revenue as profit, which is a sign of effective cost management.
Although the operating profit margin of 39.97% is strong, it is lower than the gross profit margin, suggesting higher operating expenses that could be optimized.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
41.12%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
2.60%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
45.46%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
27.82%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
An interest coverage ratio of 7.64 indicates that UNP can easily cover its interest expenses, suggesting a strong capacity to manage debt.
With a free cash flow per share of 9.76, UNP demonstrates a strong ability to generate cash after capital expenditures, which supports ongoing operations and dividends.
A debt to equity ratio of 1.90 indicates that UNP has a significant amount of debt compared to its equity, which could pose risks in downturns.
Current and quick ratios of 0.77 suggest that UNP may face challenges in meeting short-term liabilities, indicating potential liquidity issues.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
1.90x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
0.77x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
Union Pacific reported a fourth quarter operating ratio of 58%, reflecting a strong commitment to operational excellence. This performance is attributed to the effective execution of their strategies in safety, service, and efficiency.
Union Pacific has a diverse business mix and robust franchise, allowing it to adapt to changing market conditions. The company is focused on maximizing pricing and maintaining operational efficiency, which positions it well against competitors.
The company faced a less favorable business mix that negatively impacted freight revenue, particularly in the Bulk segment. Coal demand remains soft, which could affect overall financial performance.
Union Pacific is investing in infrastructure and technology, with $3.4 billion earmarked for capital expenditures in 2025. This includes modernization of assets and expansion projects that will support future growth.
The company anticipates steady demand in domestic grain and industrial markets, driven by strong service improvement and business development efforts. The pipeline for new business remains robust.
Potential regulatory changes and tariffs could introduce volatility in the market. The upcoming year presents a mixed economic outlook, which may impact volume growth.