UNP - Embedded Expectations Analysis - 2021 02 11
Union Pacific Corporation (UNP:USA) currently trades above recent averages relative to UAFRS-based (Uniform) earnings, with a 22.4x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may have concerns about average revenue per car declines, their capacity and productivity investments, and lowering their fuel consumptionSpecifically, management may lack confidence in their ability to mitigate average revenue per car declines due to lower industrial volumes, continue lowering their fuel consumption rate, and improve the efficiency of their intermodal ramps. They may also have concerns about the progress of their intermodal ramp consolidation efforts in Chicago, the repercussions of their decision to stop switching operations in Iowa, and the potential of their siding extension program. Furthermore, they may lack confidence in their ability to limit margin deterioration in the future, invest in capacity projects, and drive productivity gains by increasing train length
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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