Union Pacific Corporation (UNP), with a market cap of $150.2 billion, stands as the largest railroad operator in North America. The company, founded in the mid-19th century, spans 23 U.S. states and plays a crucial role in freight transportation, linking major ports and industrial networks while moving various commodities like agricultural products, automotive goods, and chemicals.
Mixed Performance in the Market
Over the past 52 weeks, Union Pacific’s shares have not kept pace with the broader market. While UNP has risen 1.6%, the S&P 500 Index ($SPX) has enjoyed substantial growth, rallying nearly 23%. In contrast, on a year-to-date basis, UNP’s stock has increased by 9.4%, outperforming SPX’s modest 3.6% gain.
Comparative Underperformance Against Industry Benchmarks
When examining its performance against the Industrial Select Sector SPDR Fund’s (XLI) 18.7% return over the same period, it is evident that Union Pacific has fallen behind.
Q4 2024 Earnings Report Inspires Investor Confidence
On January 23, Union Pacific saw its shares surge by 5.2% following the announcement of its Q4 2024 earnings, which reported an EPS of $2.91. This result not only exceeded analyst predictions but also represented a 7.4% increase from the previous year. Although revenue came in slightly lower than expected at $6.1 billion, improvements in operations, such as a 6% rise in car miles per employee, captured investor interest. Management’s optimistic outlook for 2025, which includes a $4.5 billion share repurchase plan and a capital expenditure target of $3.4 billion, further boosted market confidence.
Looking Ahead: Earnings Growth and Analyst Ratings
For the current fiscal year, which ends in December 2025, analysts project that UNP’s EPS will grow 8.3% year-over-year to reach $12.01. Historically, the company has had a mixed earnings surprise record, exceeding consensus estimates in three out of the last four quarters.
Among 25 analysts covering Union Pacific, the consensus rating stands at “Moderate Buy,” supported by 14 “Strong Buy” ratings, one “Moderate Buy,” nine “Holds,” and one “Strong Sell.”
Price Target Updates
On January 24, Baird increased Union Pacific’s price target to $265 while maintaining an “Outperform” rating. As it stands, UNP trades below the average price target of $264.32. The highest estimated price target of $285 suggests a possible upside of 14.3% based on current levels.
On the date of publication, Sohini Mondal did not hold (either directly or indirectly) positions in any of the securities mentioned in this article. The information presented is purely for informational purposes. For more details, please refer to the Barchart Disclosure Policy here.
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