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Since Union Pacific Corporation (NYSE:UNP) released its earnings in March 2019, analyst forecasts seem fairly subdued, with earnings expected to grow by 5.9% in the upcoming year relative to the higher past 5-year average growth rate of 16%. Presently, with latest-twelve-month earnings at US$6.0b, we should see this growing to US$6.3b by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Union Pacific in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
Exciting times ahead?
The longer term expectations from the 22 analysts of UNP is tilted towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of UNP’s earnings growth over these next few years.
This results in an annual growth rate of 7.4% based on the most recent earnings level of US$6.0b to the final forecast of US$7.3b by 2022. This leads to an EPS of $11.75 in the final year of projections relative to the current EPS of $7.95. In 2022, UNP’s profit margin will have expanded from 26% to 29%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Union Pacific, there are three important factors you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Union Pacific worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Union Pacific is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Union Pacific? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.