UNP - Embedded Expectations Analysis - 2018 09 13
Union Pacific Corporation (UNP:USA) currently trades near recent averages relative to UAFRS-based (Uniform) Earnings, with a 21.9x Uniform P/E. However, management has concerns about tariffs, network inefficiencies, and pricingSpecifically, management may lack confidence in the sustainability of total volume growth, particularly in their corn and soybean shipments in both domestic and foreign markets. Moreover, they may be concerned about the impact of additional tariffs, and may lack confidence in the sustainability of strong pricing tailwinds for trucking competitive product. They may also lack confidence in their ability to eliminate network cost inefficiencies, meet their new debt to EBITDA target, and to complete the ASR program buyback target for the year. Furthermore, they may lack confidence in their ability to drive growth in auto sales and operations in the Oklahoma Shale. Finally, they may lack confidence in their ability to improve results from short-term hauling operations in the Permian basin
Union Pacific, through its operating subsidiary, Union Pacific Railroad Company, is a Class I railroad operating in the United States. The company's network included route miles, linking Pacific Coast and Gulf Coast ports with the Midwest and eastern United States. gateways and providing several corridors to key Mexican gateways. The company serves the western two-thirds of the country and maintains coordinated schedules with other rail carriers for the handling of freight to and from the Atlantic Coast, the Pacific Coast, the Southeast, the Southwest, Canada, and Mexico. The company's business mix includes agricultural products, energy, industrial, and premium.
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