UNP - Embedded Expectations Analysis - 2020 09 04
Union Pacific Corporation (UNP:USA) currently trades above recent averages relative to UAFRS-based (Uniform) earnings, with a 25.8x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may have concerns about revenue declines, the automotive segment, and trucking competitionSpecifically, management may lack confidence in their ability to execute their volume and price levers and mitigate revenue declines in the automotive, bulk commodity, and premium freight businesses. Moreover, they may be concerned about the recovery of their automotive OEM customers and the impact of shutdowns in China on their customers. Furthermore, they may lack confidence in their ability to continue navigating strongly through the pandemic, improve operating margins, and compete with trucks in the short-haul business. In addition, they may be exaggerating their ability to win in the marketplace, and the efficiency of their railroad network. Finally, they may have concerns about the sustainability of employees returning to work, and may be exaggerating their ability to work closer with customers and the satisfaction with their current locomotive fleet
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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