Union Pacific (UNP): Reassessing Valuation After a Steady Share Price Grind Higher

Understanding the recent move in Union Pacific

Union Pacific (UNP) has quietly added to its gains over the past month, and with the stock now trading around 4% above its recent levels, investors are reassessing what they are actually paying for.

See our latest analysis for Union Pacific.

That recent 1 month share price return of 3.71% nudges Union Pacific a bit higher in what has otherwise been a steady grind, with a 1 year total shareholder return of 5.76% and a 3 year total shareholder return of 19.92%. This suggests momentum is positive rather than explosive at this stage.

If this kind of measured momentum appeals, it might be worth widening your watchlist to see how other industrial transport names stack up against growth focused plays like fast growing stocks with high insider ownership.

With shares modestly ahead of analyst targets and only a slight intrinsic premium implied, the key question is whether Union Pacific is quietly trading below its true value or if the market has already priced in its next leg of growth.

Most Popular Narrative: 9.8% Undervalued

With Union Pacific closing at $234.61 versus a narrative fair value near $260, the story behind that gap hinges on specific long term assumptions.

The analysts have a consensus price target of $256.92 for Union Pacific based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $294.0, and the most bearish reporting a price target of just $213.0.

Read the complete narrative.

Want to see what is powering that upside gap? The narrative leans on steady volume gains, firmer margins, and a richer future earnings multiple. Curious which assumptions really move the needle?

Result: Fair Value of $260.20 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, lingering uncertainty around trade policy and softer intermodal volumes could quickly challenge the upside case if demand fails to rebound as expected.

Find out about the key risks to this Union Pacific narrative.

Another Way to Look at Value

Our DCF view is slightly more conservative than the narrative fair value, with Union Pacific trading a bit above our estimate of fair value at $229.74. Rather than looking extremely cheap, this suggests a limited margin of safety. Is the market already paying a premium for execution and consolidation hopes?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Union Pacific for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 898 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Union Pacific Narrative

If you see the story differently or simply want to dig into the numbers yourself, you can build a custom narrative in minutes: Do it your way.

A great starting point for your Union Pacific research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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