Union Pacific Corporation
UNP
$292.87
-1.75%
Union Pacific Corporation is the largest publicly traded railroad in North America, operating a roughly 30,000-mile network across the western two-thirds of the United States and hauling intermodal containers, industrial products, bulk commodities such as coal and grain, chemicals, fertilizers, and automotive goods, while also holding an approximately one-quarter stake in Mexican carrier Ferromex that ties roughly a tenth of revenue to cross-border freight. Its competitive identity rests on an irreplaceable, capital-intensive right-of-way that creates high barriers to entry and a near-duopoly structure with Berkshire-owned BNSF in the western U.S., positioning it as a core infrastructure holding rather than a growth disruptor. The current investor narrative centers on an operating-efficiency turnaround and volume recovery, with second-quarter 2026 revenue rising 11.5% year over year to $6.86 billion and operating margin reaching 40.3%, alongside persistent speculation about merger and consolidation activity in the rail sector and the durability of Mexican cross-border trade under tariff policy. Bulls argue that margin expansion and pricing power can compound free cash flow through cycles, while bears point to a premium multiple, elevated leverage, and sensitivity to industrial and intermodal demand.…
UNP
Union Pacific Corporation
$292.87
Investment Opinion: Should I buy UNP Today?
The synthesized recommendation is Buy, anchored by the analyst consensus rating of Buy (mean 1.72) and an average target price of $327.63, implying 13.4% upside from $289.04. The core thesis is that UNP's irreplaceable rail network, accelerating revenue growth (11.5% YoY), and expanding operating margins (40.3%) position it to compound free cash flow through cycles, despite a premium valuation. The recent upgrade from UBS and reiterated Outperform ratings from major banks support positive estimate momentum.
Supporting evidence includes: 1) Revenue growth of 11.54% YoY in Q2 2026, with broad-based contributions from industrial and intermodal segments; 2) Operating margin of 40.25%, up from 39.36% in Q1 2026, demonstrating operating leverage; 3) Trailing free cash flow of $6.504 billion, funding dividends ($819M in Q2) and debt repayment ($334M); 4) A dividend yield of 2.36% with a sustainable 45.3% payout ratio; and 5) Implied upside of 13.4% to the average analyst target. The trailing PE of 19.26x is near the middle of its historical range (15.97x-26.47x), suggesting fair valuation relative to history.
The biggest risks that could invalidate the thesis are: 1) A cyclical freight downturn leading to volume declines and margin compression; 2) Valuation compression if the premium multiple contracts due to slower growth or rising rates; and 3) Regulatory or trade policy changes affecting cross-border trade with Mexico. The rating would upgrade to Strong Buy if operating margin sustainably exceeds 42% or if revenue growth accelerates above 15%, and downgrade to Hold if revenue growth decelerates below 8% or if operating margin falls below 38%. Relative to its own history and peers, UNP appears fairly valued, with the premium justified by superior margins and network quality.
Sign up to view all
UNP 12-Month Price Forecast
The forward-looking view is bullish, supported by accelerating revenue growth, expanding margins, and strong free cash flow, though confidence is medium due to valuation and cyclical risks. The stock is fairly valued relative to its history, and the analyst consensus points to double-digit upside. A break above the 52-week high of $315.99 would confirm the uptrend, while a drop below $269.63 would signal weakness. Upgrades would come from sustained margin expansion above 42% or merger news, while downgrades would follow revenue deceleration below 8% or margin compression below 38%.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Union Pacific Corporation's 12-month outlook, with a consensus price target around $328.78 and implied upside of +12.3% versus the current price.
Average Target
$328.78
0 analysts
Implied Upside
+12.3%
vs. current price
Analyst Count
—
covering this stock
Price Range
$245 - $375
Analyst target range
Coverage is deep, with 24 analysts and a consensus recommendation of Buy (mean rating of 1.72 on a scale where 1 is Strong Buy), and an average target price of $327.63 that implies roughly 13.4% upside from the $289.04 current price. The consensus leans clearly bullish, supported by a recent upgrade from UBS on September 16, 2026, which moved to Buy from Neutral, and by a cluster of reiterated Outperform and Overweight ratings from Baird, Citigroup, Benchmark, Wells Fargo, Barclays, RBC Capital, and TD Cowen following the July 24, 2026 earnings release. Only JP Morgan and UBS (prior to its upgrade) have sat at Neutral, indicating that skepticism is a minority view.
The target range of $245.00 to $375.00 is wide, spanning about 45% of the current price, which signals meaningful disagreement about the earnings trajectory. The $375 high target likely assumes successful margin expansion, volume recovery in industrial and intermodal freight, and possible merger-related synergies or multiple re-rating, while the $245 low target discounts margin compression, weaker cross-border trade, and a cyclical freight downturn. Consensus EPS estimates of $19.66 (range $18.90 to $20.53) and revenue estimates of $38.05 billion (range $36.91 billion to $39.34 billion) imply analysts expect solid top-line growth, and the recent pattern of upgrades and reiterated bullish ratings suggests positive estimate momentum, though the wide spread argues for position sizing that respects the downside scenario.
Drowning in data?
Find the real signal!
Bulls vs Bears: UNP Investment Factors
The bull case for UNP rests on accelerating revenue growth (11.5% YoY), expanding operating margins (40.3%), strong free cash flow ($6.5B TTM), and a consensus Buy rating with 13.4% upside to analyst targets. However, the bear case highlights a premium valuation (PEG 2.35), elevated leverage (D/E 1.72), and recent relative underperformance (-6.9% vs. S&P over 3 months), creating a balanced debate. Currently, the bull evidence appears slightly stronger given the fundamental momentum and analyst support, but the most important tension is whether margin expansion and volume recovery can continue to justify the premium multiple in a slowing industrial economy. If Q3 earnings show margin compression or volume deceleration, the bear case would gain the upper hand.
Bullish
- Revenue growth accelerating at 11.5% YoY: Q2 2026 revenue rose 11.54% year over year to $6.864 billion, up from $6.154 billion, with sequential gains from $6.217 billion in Q1 2026 and $6.085 billion in Q4 2025. This broad-based growth across industrial ($2.386B) and premium/intermodal ($2.089B) segments suggests volume recovery and pricing power are both contributing, strengthening the earnings compounding case.
- Operating margin expansion to 40.3%: Q2 2026 operating margin reached 40.25%, up from 39.36% in Q1 2026 and 39.23% in Q4 2025, while EBITDA margin improved to 51.08% from 51.36% (Q1) and 55.17% (Q4). The sequential margin expansion demonstrates operating leverage and successful efficiency initiatives, supporting the bull thesis of durable free cash flow generation.
- Strong free cash flow and dividend coverage: Trailing free cash flow stands at $6.504 billion, with Q2 2026 FCF of $2.203 billion against capex of $873 million. Operating cash flow of $3.076 billion comfortably covered $819 million of dividends and $334 million of debt repayment, and the 2.36% dividend yield with a 45.3% payout ratio leaves ample room for continued dividend growth and buybacks.
- Analyst consensus Buy with 13.4% upside: 24 analysts rate UNP a Buy (mean 1.72), with an average target price of $327.63 implying 13.4% upside from $289.04. Recent upgrades (UBS to Buy on September 16, 2026) and reiterated Outperform ratings from Baird, Citigroup, and others reflect positive estimate momentum, with consensus EPS of $19.66 and revenue of $38.05 billion for the next year.
Bearish
- Premium valuation with PEG of 2.35: UNP trades at a trailing PE of 19.26x and a forward PE of 20.30x, with the forward multiple exceeding the trailing one, implying flat to modestly lower earnings expectations. The PEG ratio of 2.35 signals the multiple is rich relative to expected growth, limiting the case for multiple expansion and increasing vulnerability to any earnings disappointment.
- Elevated leverage and low current ratio: Debt-to-equity stands at 1.72 and total debt to capitalization at 60.1%, while the current ratio of 0.91 indicates modest short-term liquidity. This reliance on capital markets is typical for railroads but leaves limited financial flexibility if freight volumes decline or interest rates remain elevated, potentially pressuring free cash flow.
- Recent relative underperformance vs. S&P: Despite strong annual gains, UNP is down 4.21% over the past three months and has underperformed the S&P 500 by 6.90 percentage points over that window. The stock peaked at $310.62 in August and pulled back to $269.63 in September, reflecting near-term momentum deceleration and sensitivity to industrial demand concerns.
- Wide analyst target range signals uncertainty: The analyst target range of $245 to $375 spans about 45% of the current price, indicating significant disagreement about the earnings trajectory. The low target of $245 (down 15.2% from current) discounts margin compression and weaker cross-border trade, highlighting the risk of a cyclical freight downturn.
UNP Technical Analysis
UNP is in a sustained uptrend, with the stock up 29.01% over the past year versus a 15.53% gain for the S&P 500, a relative strength advantage of 13.48 percentage points, and up 24.63% year to date. At $289.04, the shares sit at roughly 73.3% of the 52-week range of $215.53 to $315.99, meaning price is in the upper half of its band but still about 8.5% below the high, a positioning that reflects durable momentum without the overextension of a fresh breakout. The stock has already absorbed a maximum drawdown of -13.2% during the period, evidence that the uptrend has been tested and repaired rather than parabolic.
Short-term momentum is constructive but has decelerated relative to the annual trend: the stock is up 2.89% over the past month and 15.09% over six months, yet down 4.21% over three months, a divergence that maps to the August peak near $310.62 followed by a September pullback to $269.63 and an October recovery. That three-month softness produced a relative strength reading of -6.90 versus the S&P over the same window, even as the one-month relative strength of +1.67 turned positive again, suggesting the mid-year correction is being resolved to the upside rather than signaling a trend reversal. The recent sequence of higher closes into mid-October, with the stock closing at $289.04 versus a previous close of $288.71, supports a mean-reversion recovery back toward the prior highs.
Key technical levels are defined by the 52-week low of $215.53 as major support and the 52-week high of $315.99 as overhead resistance, with the September swing low near $269.63 acting as an intermediate floor. A decisive break above $315.99 would confirm resumption of the primary uptrend and likely open a new leg higher, while a breakdown below the $269-$270 area would invalidate the recovery and refocus attention on the 52-week low. With a beta of 0.954, UNP is slightly less volatile than the market, so position sizing can be somewhat more generous than for high-beta cyclicals, though the 11.07 short ratio and average volume of roughly 2.66 million shares imply that crowded short positioning could amplify moves in either direction.
Beta
—
—
Max Drawdown
-13.2%
Largest decline past year
52-Week Range
$216-$316
Price range past year
Annual Return
+33.1%
Cumulative gain past year
| Period | UNP Return | S&P 500 |
|---|---|---|
| 1m | +6.3% | -1.0% |
| 3m | -4.7% | +2.9% |
| 6m | +9.0% | +6.5% |
| 1y | +33.1% | +13.1% |
| ytd | +26.3% | +11.4% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
UNP Fundamental Analysis
Revenue is growing at an accelerating pace: second-quarter 2026 revenue of $6.864 billion rose 11.54% year over year from $6.154 billion, building on sequential gains from $6.217 billion in Q1 2026 and $6.085 billion in Q4 2025, and the trailing four-quarter total of roughly $25.4 billion is consistent with the company's $24.5 billion 2025 base. Segment data show industrial freight at $2.386 billion and premium/intermodal at $2.089 billion as the largest contributors, with bulk at $2.043 billion, other subsidiary revenues at $194 million, accessorial revenues at $129 million, and miscellaneous items at $23 million, indicating that growth is broad-based across industrial and premium categories rather than dependent on a single commodity. The trajectory implies that volume recovery and pricing are both contributing, which strengthens the investment case for earnings compounding if industrial demand holds.
Profitability is robust and improving: Q2 2026 net income of $1.993 billion equates to a 29.04% net margin, up from $1.701 billion and 27.36% in Q1 2026 and $1.848 billion and 30.37% in Q4 2025, while gross margin of 45.53% and operating margin of 40.25% reflect the operating leverage inherent in railroading. The company-level gross margin of 59.38% and operating margin of 40.14% underscore the efficiency of the franchise, and EBITDA of $3.506 billion in Q2 2026 (a 51.08% EBITDA margin) versus $3.193 billion in Q1 2026 shows sequential margin expansion. Diluted EPS of $3.36 in Q2 2026 versus $2.87 in Q1 2026 and $3.11 in Q4 2025 confirms that profitability is trending higher, though the reported trailing EPS figure of $0.05 in the key metrics appears inconsistent with quarterly results and should be treated as a data anomaly rather than a fundamental signal.
Balance sheet and cash flow metrics reveal a leveraged but cash-generative business: debt-to-equity stands at 1.72, total debt to capitalization at 60.1%, and the current ratio at 0.91, indicating reliance on capital markets and modest short-term liquidity that is typical for railroads with stable, contracted cash flows. Free cash flow of $6.504 billion on a trailing basis and $2.203 billion in Q2 2026, against capital expenditures of $873 million in the quarter, shows the company funds its reinvestment internally, while operating cash flow of $3.076 billion in Q2 2026 comfortably covered $819 million of dividends and $334 million of debt repayment. ROE of 38.65% and ROA of 9.27% reflect both genuine profitability and the leverage effect, and the 2.36% dividend yield with a 45.3% payout ratio leaves room for continued dividend growth and buybacks, though the low current ratio and 1.72 debt-to-equity mean financial risk is moderate rather than negligible.
Quarterly Revenue
$6.9B
2026-06
Revenue YoY Growth
+11.5%
YoY Comparison
Gross Margin
45.5%
Latest Quarter
Free Cash Flow
$6.5B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
Open an Account, get $2 TSLA now!
Valuation Analysis: Is UNP Overvalued?
Because net income is positive, the PE ratio is the primary metric: UNP trades at a trailing PE of 19.26x and a forward PE of 20.30x, an unusual configuration in which the forward multiple exceeds the trailing one, implying the market expects earnings to be roughly flat to modestly lower next year rather than accelerating. The forward estimate of $19.66 in EPS against a $289.04 share price suggests the market is pricing a mature, cash-return-oriented railroad rather than a growth compounder, and the PEG ratio of 2.35 signals that the multiple is rich relative to expected earnings growth.
Relative to the broader Industrials sector, UNP's 19.26x trailing PE and 5.59x price-to-sales ratio represent a premium, consistent with the quality and scarcity of rail assets, though the 7.89x EV/sales and 12.95x EV/EBITDA multiples are the more relevant cross-checks for a capital-intensive network business. The 7.42x price-to-book ratio is elevated, reflecting decades of buybacks that have shrunk the equity base rather than an overvaluation of tangible assets, and the 2.36% dividend yield is competitive for a large-cap industrial. On balance, the premium appears justified by the 29.04% net margin and 40.25% operating margin, which are well above typical industrial-sector profitability, though the 2.35 PEG ratio limits the case for multiple expansion.
Historically, UNP's PE has ranged from roughly 15.97x in Q3 2022 to 26.47x in Q1 2022, with the current 19.26x sitting near the middle of that band and below the 20.24x recorded in Q2 2026 and the 21.13x in Q1 2026. The price-to-sales ratio of 5.59x on the current dataset compares with historical quarterly readings in the 20x-29x range, a discrepancy that likely reflects differing share-count or data conventions and should be treated cautiously, while the price-to-book of 7.42x is near the low end of its historical 7.4x-14.5x range. The overall picture is a stock valued in line with its own history rather than at an extreme, suggesting the market is neither pricing in euphoric expectations nor discounting fundamental deterioration.
PE
19.3x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 16x~26x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
13.0x
Enterprise Value Multiple
Investment Risk Disclosure
UNP faces moderate financial and operational risks. The debt-to-equity ratio of 1.72 and total debt to capitalization of 60.1% indicate significant leverage, though interest coverage remains adequate with Q2 2026 operating income of $2.763 billion covering interest expense of $313 million by 8.8x. The current ratio of 0.91 is below 1.0, signaling potential liquidity tightness, but stable cash flows from contracted freight and $6.5 billion in trailing free cash flow mitigate this. Revenue concentration is diversified across industrial ($2.386B), premium/intermodal ($2.089B), and bulk ($2.043B) segments, reducing single-product risk, though roughly 10% of revenue is tied to Mexican cross-border trade, which is sensitive to tariff policy and economic conditions. Margin pressure could emerge if wage inflation or fuel costs rise faster than pricing, but Q2 2026 operating margin of 40.25% shows resilience.
Market and competitive risks include valuation compression if the premium multiple (19.26x trailing PE, 5.59x PS) contracts toward the sector average, especially given the PEG ratio of 2.35. The beta of 0.954 indicates slightly lower volatility than the market, but sector rotation away from industrials could pressure shares. Competitive threats are limited due to the near-duopoly with BNSF and high barriers to entry, but regulatory headwinds such as potential rail safety rules or tariff changes affecting cross-border trade could impact operations. Recent news is absent, but the wide analyst target range ($245-$375) reflects uncertainty about merger activity and trade policy, which could drive volatility.
In a worst-case scenario, a cyclical freight downturn combined with margin compression and multiple contraction could drive UNP toward its 52-week low of $215.53, representing a 25.4% decline from the current price of $289.04. The analyst low target of $245 implies a 15.2% downside, while the 52-week low provides a more severe downside reference. Historical max drawdown over the past year was -13.2%, but a more severe recession could exceed that. Investors could lose 15-25% from current levels in an adverse scenario, with the low end of the range corresponding to a breakdown below the September support of $269.63 and a retest of the 52-week low.
FAQ
The key risks include: 1) Financial risk from elevated leverage (debt-to-equity of 1.72) and a low current ratio of 0.91, which could constrain flexibility in a downturn; 2) Cyclical risk, as freight volumes are sensitive to industrial production, with a potential 25% downside to the 52-week low of $215.53; 3) Valuation risk, given the premium multiple (PEG 2.35) could compress if growth slows; and 4) Regulatory and trade policy risk, particularly affecting the ~10% of revenue from Mexican cross-border trade. These risks are ranked from moderate to high, with cyclicality being the most immediate concern.
The 12-month forecast has three scenarios: Bull (30% probability) targeting $327-$375, Base (50%) targeting $300-$340, and Bear (20%) targeting $245-$270. The base case is most likely, assuming steady revenue growth of 8-10% and stable margins, leading to a price near the analyst average target of $327.63. The key assumption is that industrial demand remains stable and no major trade disruptions occur. The wide target range reflects uncertainty, but the risk/reward is skewed to the upside given the consensus Buy rating.
UNP appears fairly valued relative to its own history and peers. The trailing PE of 19.26x is near the midpoint of its historical range (15.97x-26.47x), while the forward PE of 20.30x suggests flat earnings expectations. The PEG ratio of 2.35 indicates the market is paying a premium for growth, but the 40.25% operating margin and 29.04% net margin justify the premium. Compared to the Industrials sector, UNP trades at a premium, but its wide-moat network and superior profitability warrant it. The market is pricing in steady execution rather than explosive growth, leaving room for upside if margins expand.
From a risk/reward perspective, UNP offers a favorable setup with 13.4% upside to the average analyst target of $327.63, supported by a consensus Buy rating and strong fundamentals. The stock trades at 19.26x trailing earnings, near the middle of its historical range, and offers a 2.36% dividend yield. However, the biggest downside risk is a cyclical downturn that could push shares toward the 52-week low of $215.53 (25.4% downside). For long-term investors with a diversified portfolio, UNP is a good buy at current levels, but short-term traders should wait for a breakout above $315.99 or a pullback to support at $269.63 for better entry points.
UNP is best suited for long-term investment due to its stable cash flows, dividend growth, and wide-moat business model. The beta of 0.954 indicates lower volatility than the market, making it appropriate for conservative portfolios. Short-term trading is less ideal given the stock's recent 4.21% three-month decline and sensitivity to quarterly earnings. A minimum holding period of 2-3 years is recommended to ride out cyclical fluctuations and benefit from compounding dividends and buybacks. The 2.36% dividend yield and 45.3% payout ratio provide income while waiting for capital appreciation.