UNP - Embedded Expectations Analysis - 2018 12 10
Union Pacific Corporation (UNP:USA) currently trades near recent averages relative to UAFRS-based (Uniform) Earnings, with a 21.0x Uniform P/E, implying somewhat bullish expectations for the firm. However, management has concerns about their pricing mix, rising costs, dividends, and operational improvementsSpecifically, management may lack confidence in their ability to drive large scale service and operational improvements, and may be concerned about lingering network inefficiencies. They may also lack confidence in their ability to maintain their current net income and EPS levels. Moreover, they may lack confidence in their ability to sustain elevated fuel surcharge revenue, and appear concerned about their pricing mix. Also, they may lack confidence in their ability to increase prices faster than inflation, and may be concerned about increasing foreign competition in their export grain business. Furthermore, they may be concerned about rising materials costs, and may lack confidence in their ability to maintain dividend increases
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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