Union Pacific (NYSE: UNP)
QVI Research Report | Updated Coverage | November 2023
Summary
Union Pacific owns the highest quality business model in the North American freight rail oligopoly.
QVI has owned the stock in the Concentrated Portfolio since 2010, enjoying a 7-bagger total return while outperforming the S&P 500 by 34,250 basis points.
Despite a wide-moated, high-quality business model value proposition, shareholder yields and valuation multiples suggest a fair-value stock price.
Thus, this updated research report maintains QVI's hold rating with a caveat for existing shareholders on a low-cost basis.
When referencing this report, premium (paying) subscribers can access their Quality Value Investing (QVI) Glossary of Investing Terms and Metric Targets. Unless noted, all data presented is sourced from Seeking Alpha Premium as of the market close on November 15, 2023, and intended for illustration only.
The stock picks in the QVI Real-Time Portfolios have achieved alpha for 14 years by focusing research and analysis solely on a company’s current wealth and its share price’s present value. In other words, just the facts without unreliable predictive analysis typical of the buy-side or the business modeling overkill of Wall Street analysts.
In this updated QVI Research Report, we’ll look at the highly regarded industrials sector railroad Union Pacific Corporation to see if it continues to meet Quality Value Investing’s active portfolio inclusion criteria based on our checklist analysis of the business’s current wealth and its stock’s present value.
Union Pacific: Company Current Wealth
To uncover the current wealth of the company, QVI defines the value proposition, measures select returns on management, and assesses enterprise downside risks.
Value Proposition
Union Pacific Corporation UNP 0.00%↑ is a dividend-paying large-cap stock in the industrials sector’s rail transportation industry. UNP was added to the QVI Concentrated Portfolio on August 9, 2010, at a split and dividend-adjusted $29.40 a share.
Union Pacific Corporation, through its subsidiary, Union Pacific Railroad Company, operates in the railroad business in the United States.
The company offers transportation services for grain and grain products, fertilizers, food and refrigerated products, and coal and renewables to grain processors, animal feeders, ethanol producers, and other agricultural users; petroleum, and liquid petroleum gases; and construction products, industrial chemicals, plastics, forest products, specialized products, metals and ores, soda ash, and sand, as well as finished automobiles, automotive parts, and merchandise in intermodal containers.
The company was founded in 1862 and is headquartered in Omaha, Nebraska, USA.
QVI’s value proposition elevator pitch for Union Pacific:
Union Pacific owns the highest quality business model in the North American freight rail oligopoly.
Due Diligence Resources
For a more in-depth analysis of the all-important value proposition, visit Union Pacific’s investor relations webpage and its most recent Form 10-K Annual Report submitted to the US Securities and Exchange Commission or SEC.
Performance vs. Sector and Market
The chart below illustrates UNP’s performance against the Industrial Select Sector SPDR® Fund ETF (NYSE: XLI) and the SPDR® S&P 500 ETF Trust (NYSE: SPY) since QVI’s initial coverage of Union Pacific on August 9, 2010.
For example, UNP trounced its sector and the broader market in total return during the coverage timeframe.
QVI’s value proposition rating for Union Pacific: Bullish.