UNP - Embedded Expectations Analysis - 2018 02 28
ï€ Union Pacific Corporation (UNP:USA) currently trades near recent highs relative toUAFRS-based (Uniform) Earnings, with a 29.2x Uniform P/E, implying fairly bullish expectations for the firm. However, management has concerns about pricing, investments, and demand
ï€ Specifically, management may lack confidence in their ability to incrementally improve productivity through new hump yards, and may have concerns about falling core prices. Additionally, they may be exaggerating the extent of pricing opportunities in 2018, and may be downplaying concerns about hurricane impacts on performance. Furthermore, they may lack confidence in their ability to achieve 60% incremental margins by 2019, and may have concerns about high capital investment spent on replacement in 2018. Moreover, they may lack confidence in the sustainability of average revenue per car growth, and may be concerned about further declines in domestic demand for natural gas
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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