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Omaha, Nebraska-based Union Pacific Corporation (UNP) operates one of the largest freight rail networks in the U.S. Valued at a market cap of $129.8 billion, the company provides rail transportation services for agricultural products, automotive, chemicals, coal, and industrial goods, and also offers intermodal freight services.
This railroad giant has lagged behind the broader market over the past 52 weeks. Shares of UNP have declined 5.9% over this time frame, while the broader S&P 500 Index ($SPX) has gained 19%. Moreover, on a YTD basis, the stock is down 2.1%, compared to SPX’s 10% rise.
Narrowing the focus, UNP has also underperformed the SPDR S&P Transportation ETF’s (XTN) 15% surge over the past 52 weeks and marginal YTD drop.
UNP delivered its Q2 results on Jul. 24. However, despite posting better-than-expected performance, its shares tumbled 4.5% that day. Both its operating revenue of $6.2 billion and adjusted EPS of $3.03 handily surpassed the consensus estimates. Moreover, compared to the year-ago quarter, its top-line grew 2.4% due to higher volume and solid core pricing gains, while its adjusted EPS advanced 11.8%.
For the current fiscal year, ending in December, analysts expect UNP’s EPS to grow 5.7% year over year to $11.72. The company’s earnings surprise history is mixed. It surpassed the consensus estimates in two of the last four quarters, while missing on two other occasions.
Among the 25 analysts covering the stock, the consensus rating is a "Moderate Buy” which is based on 14 “Strong Buy,” one "Moderate Buy,” nine “Hold,” and one “Strong Sell” rating.
This configuration is less bullish than a month ago, with 16 analysts suggesting a “Strong Buy” rating.
On Aug. 2, Citigroup Inc. (C) analyst Ariel Rosa downgraded UNP stock to a “Hold" rating and cut its price target to $250, implying a 12% potential upside from the current levels.
The mean price target of $260.12 represents a 16.6% premium from UNP’s current price levels, while the Street-high price target of $286 suggests an ambitious upside potential of 28.1%.
On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
