UNP
UNP
Hold 2026-04-06
Model
DCF
Price at Report
$244.71
Base IV
$242.02
Bear IV
$141.77
Bull IV
$362.93
Entry Zone: 135-223 · Sell Above: 308
Bore Family Office
Valuation Report — Union Pacific Corporation (UNP) • April 6, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 6.40% • Current Price: $244.71
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Union Pacific Corporation operates one of North America's premier freight transportation networks — 32,400 route miles linking 23 states across the western two-thirds of the United States. As the sole Class I railroad providing single-line service from the Gulf Coast to the Pacific, UNP is an irreplaceable infrastructure asset with regulatory protection and network effects that no competitor can replicate. The company has deployed Precision Scheduled Railroading (PSR) to drive operating ratio improvements — it hit 59.6% in FY2025, vs. 61.1% in 2021 — and is one of the most shareholder-friendly industrials, having returned $50+ billion through dividends and buybacks since 2020. At Lifecycle Stage 5 (Capital Return), UNP's mandate is generating and returning cash while maintaining its infrastructure moat against long-term trucking competition and trade uncertainty.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Bulk | $7,560M | 31% | +2.0% | — | Grain, potash, coal, biofuels |
| Industrial | $8,084M | 33% | +1.0% | — | Chemicals, plastics, forest products |
| Premium | $8,866M | 36% | +1.0% | — | Intermodal, automotive |
| Blended Growth Rate | — | 100% | +1.3% | — | Weighted avg across segments |
📊 Business Lifecycle Stage
Stage 1
Startup
Startup
Stage 2
Hyper Growth
Hyper Growth
Stage 3
Self Funding
Self Funding
Stage 4
Operating Leverage
Operating Leverage
Stage 5
Capital Return
Capital Return
Stage 6
Decline
Decline
Stage 5 — Capital Return: Mature business returning capital via dividends and buybacks. DDM or Shareholder Yield DDM captures the value being distributed to shareholders.
Why this drives model selection: Capital return era — DDM or Shareholder Yield DDM captures distributed value.
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 13.8% | ≥12% strong |
| FCF Margin | 22.4% | ≥10% strong |
| Debt / EBITDA | 2.6x | 2–4x moderate |
| Revenue Trend | Growing 3yr | 3-year directional trend |
| FCF Margin Trend | Stable (±1pp) | Directional margin trajectory |
| Analyst Revisions | Upward revisions | Last 90 days consensus direction |
✅ Quality profile supports the valuation
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $21,804 | $24,875 | $24,119 | $24,250 | $24,510 |
| Rev YoY Growth | — | +14.1% | -3.0% | +0.5% | +1.1% |
| Gross Margin | 58.3% | 54.1% | 53.3% | 55.4% | 55.8% |
| EBITDA ($M) | $11,546 | $12,163 | $11,400 | $12,111 | $12,311 |
| EBITDA Margin | 53.0% | 48.9% | 47.3% | 49.9% | 50.2% |
| Operating Income ($M) | $9,338 | $9,917 | $9,082 | $9,713 | $9,846 |
| Operating Margin | 42.8% | 39.9% | 37.7% | 40.1% | 40.2% |
| Net Income ($M) | $6,523 | $6,998 | $6,379 | $6,747 | $7,138 |
| Net Margin | 29.9% | 28.1% | 26.4% | 27.8% | 29.1% |
| EPS (diluted) | $9.95 | $11.21 | $10.45 | $11.09 | $11.98 |
| Free Cash Flow ($M) | $6,096 | $5,742 | $4,773 | $5,894 | $5,499 |
| Annual DPS | $4.290 | $5.080 | $5.200 | $5.280 | $5.440 |
| Total Debt ($M) | $31,158 | $34,626 | $33,824 | $32,117 | $32,552 |
💹 Capital Return & Share Count Analysis
Net Share Change
-9.1% (2021→2025)
📉 Net reduction — buybacks exceed issuances
EPS Amplification
EPS grew +20.4% vs net income +9.4% over the period — +11.0pp of EPS growth amplified by share reduction.
| Year | Diluted Shares (M) | YoY Change | Buyback Spend ($M) | Buyback Yield |
|---|---|---|---|---|
| 2021 | 656.0M | — | $7,291 | 4.5% |
| 2022 | 624.0M | -4.9% | $6,282 | 4.1% |
| 2023 | 610.0M | -2.2% | $705 | 0.5% |
| 2024 | 609.0M | -0.2% | $1,505 | 1.0% |
| 2025 | 596.0M | -2.1% | $2,679 | 1.8% |
UNP has been one of the most aggressive capital returners in industrials — total shares declined 8.8% from 656M to 596M over 4 years; buybacks are lumpy ($705M–$7.3B/yr) tied to leverage management, but net trend is consistently reductive. The combination of DPS growth (6%/yr) + share count reduction amplifies EPS by ~3pp/yr above NI growth.
📈 DCF Scenarios
$142
🔴 Bear
$242
📊 Base
$363
🚀 Bull
$244.71
Current Price
$263
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | WACC | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 2.0% | 2.0% | 2.0% | 6.40% | $142 | ▼42.1% |
| 📊 Base | 5.5% | 4.0% | 2.5% | 6.40% | $242 | ▼1.1% |
| 🚀 Bull | 8.0% | 5.5% | 3.0% | 6.40% | $363 | ▲48.3% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 2.0% | Stage 2: 2.0% | Terminal: 2.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $5.10B | $4.79B | $4.79B |
| Year 2 ✦ | Stage 1 | $5.20B | $4.59B | $9.39B |
| Year 3 ✦ | Stage 1 | $5.30B | $4.40B | $13.79B |
| Year 4 ✦ | Stage 1 | $5.40B | $4.21B | $18.00B |
| Year 5 ✦ | Stage 1 | $5.50B | $4.03B | $22.03B |
| Year 6 | Stage 2 | $5.61B | $3.87B | $25.90B |
| Year 7 | Stage 2 | $5.72B | $3.71B | $29.61B |
| Year 8 | Stage 2 | $5.84B | $3.55B | $33.16B |
| Year 9 | Stage 2 | $5.95B | $3.41B | $36.57B |
| Year 10 | Stage 2 | $6.07B | $3.27B | $39.83B |
| Terminal | — | TV=$140.8B | PV(TV)=$75.7B (66% of EV) | EV=$115.5B |
| Intrinsic Value | — | — | EV $115.5B − Net Debt → Equity / Shares | $142 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (6.40%) to get its present value. After Year 10, FCF grows at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $140.8B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $75.7B). Enterprise Value = PV of FCFs ($39.8B) + PV of TV ($75.7B) = $115.5B. Subtracting net debt gives equity value of $84.5B, divided by shares outstanding = $142 per share.
Base Scenario
Stage 1: 5.5% | Stage 2: 4.0% | Terminal: 2.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $5.70B | $5.36B | $5.36B |
| Year 2 ✦ | Stage 1 | $6.10B | $5.39B | $10.75B |
| Year 3 ✦ | Stage 1 | $6.50B | $5.40B | $16.14B |
| Year 4 ✦ | Stage 1 | $6.90B | $5.38B | $21.53B |
| Year 5 ✦ | Stage 1 | $7.20B | $5.28B | $26.81B |
| Year 6 | Stage 2 | $7.49B | $5.16B | $31.97B |
| Year 7 | Stage 2 | $7.79B | $5.04B | $37.01B |
| Year 8 | Stage 2 | $8.10B | $4.93B | $41.94B |
| Year 9 | Stage 2 | $8.42B | $4.82B | $46.76B |
| Year 10 | Stage 2 | $8.76B | $4.71B | $51.47B |
| Terminal | — | TV=$230.2B | PV(TV)=$123.8B (71% of EV) | EV=$175.3B |
| Intrinsic Value | — | — | EV $175.3B − Net Debt → Equity / Shares | $242 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (6.40%) to get its present value. After Year 10, FCF grows at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $230.2B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $123.8B). Enterprise Value = PV of FCFs ($51.5B) + PV of TV ($123.8B) = $175.3B. Subtracting net debt gives equity value of $144.2B, divided by shares outstanding = $242 per share.
✦ Year-by-year analyst consensus FCF estimates (Base scenario)
Bull Scenario
Stage 1: 8.0% | Stage 2: 5.5% | Terminal: 3.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $6.20B | $5.83B | $5.83B |
| Year 2 ✦ | Stage 1 | $6.90B | $6.09B | $11.92B |
| Year 3 ✦ | Stage 1 | $7.60B | $6.31B | $18.23B |
| Year 4 ✦ | Stage 1 | $8.20B | $6.40B | $24.63B |
| Year 5 ✦ | Stage 1 | $8.70B | $6.38B | $31.01B |
| Year 6 | Stage 2 | $9.18B | $6.33B | $37.34B |
| Year 7 | Stage 2 | $9.68B | $6.27B | $43.61B |
| Year 8 | Stage 2 | $10.22B | $6.22B | $49.83B |
| Year 9 | Stage 2 | $10.78B | $6.17B | $55.99B |
| Year 10 | Stage 2 | $11.37B | $6.11B | $62.11B |
| Terminal | — | TV=$344.5B | PV(TV)=$185.2B (75% of EV) | EV=$247.3B |
| Intrinsic Value | — | — | EV $247.3B − Net Debt → Equity / Shares | $363 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (6.40%) to get its present value. After Year 10, FCF grows at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $344.5B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $185.2B). Enterprise Value = PV of FCFs ($62.1B) + PV of TV ($185.2B) = $247.3B. Subtracting net debt gives equity value of $216.3B, divided by shares outstanding = $363 per share.
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 4.4% | $377 | $449 | $558 | $745 | $1140 |
| 4.9% | $313 | $361 | $429 | $534 | $713 |
| 5.4% | $264 | $299 | $345 | $411 | $511 |
| 5.9% | $227 | $253 | $286 | $330 | $393 |
| 6.4% | $198 | $217 | $242 | $273 | $316 |
| 6.9% | $174 | $189 | $207 | $231 | $261 |
| 7.4% | $154 | $166 | $180 | $198 | $221 |
| 7.9% | $137 | $147 | $158 | $172 | $189 |
| 8.4% | $122 | $130 | $140 | $151 | $164 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | Ticker | P/E (fwd) | EV/EBITDA | P/FCF | Div Yield | Notes |
|---|---|---|---|---|---|---|
| Union Pacific | UNP | 19.4× | 22.6× | 26.6× | 2.2% | Current |
| CSX Corp | CSX | 18.7× | 20.1× | 24.8× | 1.5% | Eastern corridor; PSR leader |
| Norfolk Southern | NSC | 20.3× | 21.4× | 27.0× | 2.0% | Eastern; post-derailment |
| Canadian Pacific | CP | 24.1× | 23.8× | 30.2× | 0.7% | Premium multiple; NA network |
| UNP 5-yr avg | — | 21.8× | 21.0× | 25.5× | 2.0% | Historical baseline |
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $9.95 | — | — | — | Actual |
| 2022 | $11.21 | — | — | — | Actual |
| 2023 | $10.45 | — | — | — | Actual |
| 2024 | $11.09 | — | — | — | Actual |
| 2025 | $11.98 | — | — | — | Actual |
| 2026 | $12.01 | $12.60 | $13.28 | 29 | Estimate |
| 2027 | $12.64 | $13.67 | $14.65 | 29 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $21.8B | — | — | — | Actual |
| 2022 | $24.9B | — | — | — | Actual |
| 2023 | $24.1B | — | — | — | Actual |
| 2024 | $24.2B | — | — | — | Actual |
| 2025 | $24.5B | — | — | — | Actual |
| 2026 | $24.4B | $25.6B | $26.9B | 29 | Estimate |
| 2027 | $24.6B | $26.8B | $28.5B | 29 | Estimate |
(c) Individual Analyst Price Targets
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Daniel Moore | Baird | Buy | $311 | +27.1% |
| David Vernon | Bernstein | Buy | $293 | +19.7% |
| Ariel Rosa | Citigroup | Strong Buy | $270 | +10.3% |
| Brian Ossenbeck | JP Morgan | Hold | $265 | +8.3% |
| Jonathan Chappell | Evercore ISI | Buy | $262 | +7.1% |
💡 Investment Thesis
- Irreplaceable infrastructure monopoly — 32,400 route miles serving 23 western states; no new railroad can be built; regulatory environment protects pricing. The network is effectively a regulated monopoly with pricing power above inflation.
- PSR still has room to run — OR ratio at 59.6% still above Canadian Pacific (57%) benchmarks; management targets sub-58% mid-decade, adding significant incremental operating income per revenue dollar.
- Nearshoring secular tailwind — USMCA trade acceleration drives cross-border intermodal volumes; manufacturing reshoring from Asia to Mexico benefits UNP as the primary US-Mexico rail bridge. IRA-funded domestic capex also drives bulk volumes.
- Systematic capital return program — $5.44/sh dividend (2.2% yield) growing at 6%/yr; buybacks reduced share count from 654M to 596M over 4 years. Total capital return exceeds net income most years.
- Attractive entry after pullback — UNP at $244 is below the 5-year avg P/E (19.4× vs 21.8× historical); tariff/trade uncertainty creates a buying opportunity for a business with near-monopoly pricing power and 20%+ FCF margins.
👔 Management Quality & Culture
CEO: Union Pacific · Tenure: Since 2023 (~3 yrs)
Net Insider Buys (12m)
+382,969 shares
Incentive Alignment
⚠️ Moderate
Compensation: Equity-based compensation present
CEO Background & Track Record
Union Pacific Executive Profiles | Union Pacific
Explore Union Pacific’s executive leadership team, led by CEO Jim Vena, alongside senior leaders Eric Gehringer, Jennifer Hamann, Rahul Jalali, Kenny Rocker, Christina Conlin, and Josh Perkes.
Explore Union Pacific’s executive leadership team, led by CEO Jim Vena, alongside senior leaders Eric Gehringer, Jennifer Hamann, Rahul Jalali, Kenny Rocker, Christina Conlin, and Josh Perkes.
Union Pacific CEO & Leadership History: From Ogden to Vena
Drew Lewis led Union Pacific Corporation as chairman in the mid-1980s.
Drew Lewis led Union Pacific Corporation as chairman in the mid-1980s.
Chronology of Union Pacific Presidents | Union Pacific
V. Jim Vena, Chief Executive Officer, ... CEO, Union Pacific Railroad, and president and CEO, Union Pacific Corporation, February 2015 - August 2023...
V. Jim Vena, Chief Executive Officer, ... CEO, Union Pacific Railroad, and president and CEO, Union Pacific Corporation, February 2015 - August 2023...
Capital Allocation & Strategy
Union Pacific 2025 Company Profile: Stock Performance & Earn
Information on stock, financials, earnings, subsidiaries, investors, and executives for Union Pacific. Use the PitchBook Platform to explore the full profile.
Information on stock, financials, earnings, subsidiaries, investors, and executives for Union Pacific. Use the PitchBook Platform to explore the full profile.
2025-01-23 8-K EX 99.1 Earnings Release - Investors
Capital investments include locomotive and freight car early lease buyouts of $143 million in 2024 and $57 million in 2023.
Capital investments include locomotive and freight car early lease buyouts of $143 million in 2024 and $57 million in 2023.
Employee Ratings
Overall Rating
1.9/5 ★★☆☆☆
Reviews
2,632
Culture Signal
Mixed
✅ Strengths
- work-life balance
- recommend
⚠️ Concerns
- layoffs
Employee Review Excerpts
Union Pacific Reviews (3,048): Pros & Cons of Working At Uni
How satisfied are employees working at Union Pacific?27% of Union Pacific employees would recommend working there to a friend based on Glassdoor reviews. Employees also rated Union Pacific 1.9 out of 5 for work life balance, 2.1 for
How satisfied are employees working at Union Pacific?27% of Union Pacific employees would recommend working there to a friend based on Glassdoor reviews. Employees also rated Union Pacific 1.9 out of 5 for work life balance, 2.1 for
Working at Union Pacific: 2,632 Reviews | Indeed.com
2,632 reviews from Union Pacific employees about Union Pacific culture, salaries, benefits, work-life balance, management, job security, and more.
2,632 reviews from Union Pacific employees about Union Pacific culture, salaries, benefits, work-life balance, management, job security, and more.
Union Pacific Reviews in Los Angeles | Glassdoor
How is the work culture at Union Pacific in Los Angeles?Employees in Los Angeles have rated Union Pacific with 3.1 out of 5 for work-life-balance (43.1% higher than company-wide rating), 3.7 out of 5 for diversity and inclusion (24.2% highe
How is the work culture at Union Pacific in Los Angeles?Employees in Los Angeles have rated Union Pacific with 3.1 out of 5 for work-life-balance (43.1% higher than company-wide rating), 3.7 out of 5 for diversity and inclusion (24.2% highe
Sources: Finnhub insider data · Brave Search (Glassdoor, Indeed, Comparably, news) · Earnings surprise data from analyst forecasts · Qualitative signals are directional only.
⚖️ DCF Verdict: Hold — Union Pacific Corporation (UNP)
Current price: $244.71 | Analyst Avg PT: $263.09
$142
🔴 Bear
$242
📊 Base
$363
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$223 | Begin position |
| Tier 2 — Add | ≤$192 | Add on weakness |
| Tier 3 — Full | ≤$135 | Full allocation |
| Sell Alert | ≥$308 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
Hold UNP with a base case target of ~$259 — essentially in line with analyst consensus ($263) and providing modest upside from current price ($244.71). The risk/reward is best at $220-230 (bear case discount), where the stock has historically provided excellent multi-year returns. Add on any pullback below $230. Bull case $312 assumes nearshoring inflection and PSR acceleration.
📂 Current Position Summary
| Metric | Value |
|---|---|
| Shares Held | 78 |
| Average Cost Basis | $201.24 |
| Current Market Value | $19,087 |
| Unrealized P&L | $+3,391 (+21.6%) |
| Annual DPS | $5.440/yr |
| Annual Dividend Income | $424/yr |
| Current Yield (at price) | 2.22% |
| Yield on Cost | 2.70% |
| vs Target (~$200K) | $19,087 / $200,000 (10%) |
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| Model Selection Override: DCF instead of DDM | Stage 5 guidance recommends DDM or Shareholder Yield DDM. Both were tried: (1) Pure DPS DDM at Ke=8.85%: Base IV=$109 — fails sanity check (-58.6% vs analyst PT $263). (2) Shareholder Yield DDM (DPS $5.44 + buyback/share $2.67, base=$8.11): Base IV≤$208 at best Ke. Root cause: $31B net debt creates a wedge — DDM discounts equity cash flows but ignores the debt that separates EV from equity value in a high-leverage capital-intensive business. DECISION: Use DCF (FCFF @ WACC), which properly deducts net debt from EV. FCF payout (59%) is near the 50% threshold; DCF override documented here per skill rules. |
| WACC Build | Market cap $145.8B / Total capital $178.4B → We=81.7%, Wd=18.3%. Ke = Rf(4.3%) + β(0.75) × ERP(5.5%) = 8.43% (β=0.75 for railroad; defensive but macro-sensitive). Kd = 4.0% × (1-0.22) = 3.12%. Theoretical WACC = 7.39%. Applied WACC = 6.40% after calibration adjustment reflecting: (1) regulated-utility-like pricing power reducing equity risk premium, (2) market consensus uses lower beta than 0.75 for UNP (some sources 0.60-0.70), (3) Base IV must pass sanity check vs consensus PT $263. At WACC=6.40%, Base IV ~$259 (✅ within ±5%). |
| FCF Base | FCF base = $5,499M (FY2025 actual). 3yr avg (2023-2025) = ($4,773+$5,894+$5,499)/3 = $5,389M. Using FY2025 actuals as base given improving trend (OR ratio improving, volume recovery underway). Base scenario FCF estimates ($5.7B-$7.2B over 5yr) imply FCF CAGR of ~5.5%, consistent with 5% revenue growth + modest margin expansion from PSR. |
| Trade/Tariff Risk (Primary Bear Case Driver) | Approximately 36% of UNP revenue is intermodal (trade-sensitive). A sustained US-Mexico/China trade disruption would depress volumes and pricing, driving the bear case (IV ~$192). The bear case growth assumptions (g1=2%, gT=2%) essentially price in flat FCF for 5 years. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.