Union Pacific (UNP) Valuation Check as BNSF Seeks Review of Southern Pacific Merger Conditions

BNSF Railway’s push for a fresh review of the decades old Union Pacific Southern Pacific merger terms has suddenly put Union Pacific (UNP) back under the regulatory spotlight, and that matters for the stock.

See our latest analysis for Union Pacific.

The renewed focus on merger conditions lands at a time when Union Pacific’s 1 month share price return of 7.41 percent and 90 day share price return of 7.71 percent point to building momentum, even as its 5 year total shareholder return of 30.28 percent reflects steadier long term compounding.

If you are weighing how this regulatory twist fits into the wider transport theme, it could be worth comparing Union Pacific with other leading aerospace and defense stocks that may be reshaping how goods and people move globally.

With earnings still growing and the share price sitting roughly 10 percent below consensus targets, is Union Pacific quietly undervalued ahead of a regulatory shake up, or is the market already pricing in every mile of future growth?

Most Popular Narrative Narrative: 8.9% Undervalued

With the narrative fair value sitting modestly above Union Pacific’s last close of $237.29, the story centers on steady growth and resilient margins.

Analysts expect earnings to reach $8.3 billion (and earnings per share of $14.71) by about September 2028, up from $6.9 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $7.2 billion.

Read the complete narrative.

Curious how modest margin shifts, disciplined buybacks, and a future earnings multiple below the sector average can still indicate potential upside? The full narrative lays out the playbook.

Result: Fair Value of $260.40 (UNDERVALUED)

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

However, persistent trade policy uncertainty and intermodal volume softness could quickly challenge today’s upbeat valuation assumptions and slow the pace of expected earnings growth.

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

Another Take on Valuation

On a simple price to earnings lens, Union Pacific looks less generous. Its 20x multiple is richer than close peers at 17.9x, even if it still trades below the US Transportation average of 30.6x and near a fair ratio of 21.9x. Is that thin gap enough compensation for rail specific risks?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Union Pacific Narrative

If you see the story differently or want to dig into the numbers yourself, you can build a custom view in just 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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