Key Stats for Union Pacific Stock
- Last 30-Day Performance: 15%
- 52-Week Range: $205 to $266
- Valuation Model Target Price: $303
- Implied Upside: 15%
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What Happened?
Union Pacific stock rose about 15% in the last 30 days, recently trading near $263 per share as investors reacted to stronger earnings and improved operating performance.
The stock moved higher because the company delivered record full-year profitability and guided for continued operating ratio improvement in 2026, easing concerns that weaker freight volumes would pressure margins.
Union Pacific reported 2025 net income of $7.1 billion, up 6%, with EPS of $11.98 up 8%. Fourth quarter EPS reached a record $3.11 even as revenue slipped 1% to $6.1 billion on 4% lower volume.
The company also posted a best-ever full-year adjusted operating ratio of 59.3%, improved 60 basis points, while freight car velocity reached 239 miles per day and terminal dwell improved to 19.8 hours.
EVP Eric Gehringer emphasized execution, stating, “for the full year 2025, we achieved best-ever results in both areas,” referring to safety performance.
Management guided to mid-single-digit EPS growth in 2026 off the $11.98 base and expects further operating ratio improvement even as macro indicators soften.
Investors interpreted that outlook as confirmation that productivity gains and pricing discipline can continue driving earnings growth even without a sharp freight rebound.
Recent institutional filings showed largely stable positioning. Vanguard trimmed its stake by 0.3% and now holds 58.67 million shares valued at about $13.87 billion, while PNC Financial reduced its position by 2.5%.
At the same time, Impax Asset Management increased its stake by 26.7%, Assetmark raised its position by 37.9%, and institutional ownership remains high at 80.38%, suggesting long-term investors are broadly maintaining exposure despite the recent rally.
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Is Union Pacific Undervalued?
Under valuation assumptions, the stock is modeled using:
- Revenue Growth (CAGR): 7.3%
- Operating Margins: 42.9%
- Exit P/E Multiple: 19.0x
Revenue is projected to rise from $24,510 million in 2025 to $25,308 million in 2026 and $26,569 million in 2027, reaching $30,265 million by 2028 based on analyst estimates.
That implies a modeled 7.3% CAGR through the forecast period, supported by pricing discipline, network efficiency, and gradual freight normalization rather than aggressive macro acceleration.
Analyst expectations reflect steady demand across bulk, industrial, and domestic intermodal markets, along with continued business development wins and cost control.
Because railroads operate with a largely fixed-cost structure, even modest volume stabilization can translate into stronger earnings growth through operating leverage.
Margins are modeled at 42.9%, slightly above the recent LTM EBIT margin of 40.7%, reflecting continued productivity improvements and operational efficiency.
Record train length, improved dwell times, and locomotive productivity gains provide structural support to profitability even in a softer demand environment.
Based on these inputs, the model estimates a target price of $302.57, implying about 15% total upside over roughly three years, or approximately 5% annualized, suggesting the stock appears modestly undervalued at current prices.
Results over the next year hinge on execution across several higher-impact areas. Pricing discipline remains critical as wage inflation runs near 4% to 5%, and volume stabilization in industrial production and housing-related shipments would improve operating leverage.
At current levels, Union Pacific appears modestly undervalued, with future performance driven more by operational execution, pricing power, and incremental freight recovery than by rapid revenue acceleration.
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