UNP
UNION PACIFIC CORPNYSEValuation snapshot
Above bull casePrice is above even the bull case.
Price as of Sep 4, 2026 · Valuation Sep 6, 2026
What drives UNP's base case?
base-case thesisUnderlying freight revenue and shipment volume are growing, though much less rapidly than headline sales that include fuel charges. Faster railcar movement, shorter terminal waits, longer trains, and fewer employees per unit of work show that the network can handle more traffic efficiently. The central case assumes those gains persist, while cyclical demand prevents unusually rapid long-term growth.
What shapes the assumptions
Freight revenue excluding fuel increased 4% in the latest quarter
Underlying freight revenue growth
Raises revenue growth
Year-to-date freight-car velocity improved 7%
Daily miles per freight car
Raises operating margin
The 2026 capital plan is 3.3 billion dollars
Capital spending
Informs reinvestment
Annual carloads rose 3% in 2024 and 1% in 2025
Revenue carloads
Raises terminal growth
Each driver links a business metric to the forecast assumption it shapes — the basis for this case, not investment advice.
Why the gap?
The market is pricing this as if revenue grows 19.0% a year. Over the last 5 years it grew 3.7% a year — so the price assumes far more than it has delivered.
What else could explain it?›
- Or, holding growth steady
- the price is also consistent with a 77.3% operating margin, against the 41.5% assumed here.
- How confident is this estimate?
- Robustness 68.0/10 (Moderate) — some of any gap is our own uncertainty rather than disagreement.
- What would change the answer?
- Which assumption this valuation swings on, and by how much.
Many combinations of assumptions reproduce the same price. These are ways to read what the market might be expecting, not the market's actual view. How this is worked out
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
View details
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
Three independently researched cases generated automatically from published financials. Every assumption is justified and cited; the discount rate is computed from researched market inputs.
Company value drivers
Ranked operating metrics and the valuation assumptions they influence.
1. Annual operating profit margin
This measures operating income retained from each dollar of revenue and directly captures pricing, traffic mix, fuel costs, and network efficiency.
40.2%
derived2. Annual revenue carloads
This is the number of revenue-producing shipments handled across the network and is the clearest reported measure of physical demand.
8,447 thousand carloads
reported3. Annual freight-car velocity
Daily miles per freight car indicate how quickly equipment cycles through the network, affecting capacity, service quality, and unit cost.
225 miles per car per day
reported4. Annual cash capital investment as a share of revenue
This measures how much revenue must be committed to track, equipment, facilities, and technology before cash can be distributed to investors.
15.5%
derivedBase inputs from financials
source period →Base revenue (TTM)
$25.4B
Diluted shares
594,000,000
Net cash
—
Bear
low confidence$112.29
IV / share
-61.2% vs $289.15
- Explicit cash flows
- $31.74
- Terminal value
- $80.54
- Net cash
- $0.00
- Intrinsic value / share
- $112.29
71.7% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
Revenue growth3.0% → 2.0% → 2.0% → 1.8% → 1.6%medium
How derived: Second-quarter revenue rose 0.12 but only 0.04 excluding fuel surcharge and volume rose 0.02, so this case assumes fuel normalization, weak coal and international intermodal demand, and progressively slower underlying growth.
Why this confidence: Current volume and commodity disclosures ↑, Cyclical freight demand and fuel-surcharge volatility ↓
Measured by
- Annual revenue carloads8,447 thousand carloadsreported
Evidence for
- Management described the economic forecast as mixed, while year-to-date carloads increased only 0.01 and international intermodal and coal remained weak.[Union Pacific Q2 2026 results]· primary
Evidence against
- Second-quarter operating revenue increased 0.12, freight revenue excluding fuel increased 0.04, and management said customer demand was increasing.[Union Pacific Q2 2026 results]· primary
Operating margin39.0%medium
How derived: The recent quarterly margin was about 0.403, but this case holds the long-run level at 0.39 because higher fuel, inflation, unfavorable traffic mix, and acquisition costs recently outweighed productivity gains.
Why this confidence: Recent reported profitability ↑, Uncertain fuel prices and traffic mix ↓
Measured by
- Annual operating profit margin40.2%derived
- Annual freight-car velocity225 miles per car per dayreported
- Annual cash capital investment as a share of revenue15.5%derived
Evidence for
- The second-quarter operating ratio deteriorated to 0.597 as higher fuel prices, inflation, and acquisition expenses more than offset pricing and productivity.[Union Pacific Q2 2026 Form 10-Q]· primary
Evidence against
- Management reaffirmed operating-ratio improvement, while freight-car velocity improved 0.05 and terminal dwell improved 0.07 in the quarter.[Union Pacific Q2 2026 results]· primary
Tax rate24.0%medium
How derived: The effective rate was 0.221 in 2025 and 0.228 in the first half of 2026, so the bear case uses 0.24 to allow for normalization of favorable state-law and tax-credit effects.
Why this confidence: Audited and quarterly effective-rate history ↑, Future legislation and tax-credit availability ↓
No tracked driver measures this assumption yet.
Evidence for
- The 2025 rate benefited from lower deferred tax expense following Kansas legislation and from purchased tax credits, making the reported 0.221 rate potentially unrepresentative.[Union Pacific 2025 Form 10-K]· primary
Evidence against
- The first-half 2026 effective tax rate was only 0.228, including a second-quarter rate of 0.22.[Union Pacific Q2 2026 Form 10-Q]· primary
Reinvestment rate40.0%medium
How derived: A capital-intensive network required 3.791 billion dollars of cash investment in 2025 and has a 3.3 billion dollar 2026 plan, so this case assumes 0.40 of after-tax operating profit remains tied up in maintenance and less-productive growth investment.
Why this confidence: Detailed capital-program disclosures ↑, Simplified model combines maintenance and growth reinvestment ↓
Measured by
- Annual freight-car velocity225 miles per car per dayreported
- Annual cash capital investment as a share of revenue15.5%derived
Evidence for
- Cash capital investment rose to 3.791 billion dollars in 2025, including 1.987 billion dollars for road-infrastructure replacement.[Union Pacific 2025 Form 10-K]· primary
Evidence against
- The 2026 capital plan was reduced to approximately 3.3 billion dollars and first-half capital investment declined from 1.842 billion dollars to 1.810 billion dollars.[Union Pacific Q2 2026 Form 10-Q]· primary
Terminal growth1.8%low
How derived: With 2025 revenue growth of 0.011, only 0.01 year-to-date carload growth, and continuing coal and trade exposure, this case assumes mature growth below broad nominal economic growth.
Why this confidence: Long record of mature revenue growth ↑, Very long forecast horizon ↓
Measured by
- Annual revenue carloads8,447 thousand carloadsreported
Evidence for
- Annual revenue grew only 0.011 in 2025, while first-half 2026 carloads grew 0.01 and coal carloads declined materially in the latest quarter.[Union Pacific Q2 2026 Form 10-Q]· primary
Evidence against
- Management continues to invest in intermodal terminals, sidings, capacity, and technology specifically to attract more carloads and support growth.[Union Pacific Q2 2026 Form 10-Q]· primary
Base
low confidence$155.18
IV / share
-46.3% vs $289.15
- Explicit cash flows
- $40.90
- Terminal value
- $114.28
- Net cash
- $0.00
- Intrinsic value / share
- $155.18
73.6% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
Revenue growth5.5% → 4.0% → 3.5% → 3.0% → 2.5%medium
How derived: Starting from 0.04 second-quarter freight growth excluding fuel, 0.02 quarterly volume growth, core pricing gains, and expanding Mexico traffic, the central case allows a strong first year before growth settles toward a mature railroad rate.
Why this confidence: Management guidance and current commodity data ↑, Fuel surcharge makes headline revenue less predictive ↓
Measured by
- Annual revenue carloads8,447 thousand carloadsreported
Price implies: 19.0% vs our 3.7% — one of several sets that fit this price
Evidence for
- Second-quarter freight revenue excluding fuel increased 0.04, volume increased 0.02, Mexico revenue increased 0.10, and core pricing gains continued.[Union Pacific Q2 2026 Form 10-Q]· primary
Evidence against
- Year-to-date carloads increased only 0.01, while international intermodal carloads fell 0.03 and management retained a mixed economic outlook.[Union Pacific Q2 2026 results]· primary
Operating margin41.5%medium
How derived: The company produced margins near 0.40 in 2025 and the first half of 2026, so the base case assumes pricing above inflation and sustained network productivity lift the mature margin moderately to 0.415.
Why this confidence: Three years of reported margin and productivity data ↑, Margin target exceeds recent reported results ↓
Measured by
- Annual operating profit margin40.2%derived
- Annual freight-car velocity225 miles per car per dayreported
- Annual cash capital investment as a share of revenue15.5%derived
Price implies: 77.3% vs our 41.5% — one of several sets that fit this price
Evidence for
- Management reaffirmed pricing dollars above inflation and operating-ratio improvement; year-to-date freight-car velocity improved 0.07 and workforce productivity improved 0.06.[Union Pacific Q2 2026 results]· primary
Evidence against
- The year-to-date operating ratio deteriorated 0.003 because fuel, inflation, and acquisition expenses outweighed pricing and productivity benefits.[Union Pacific Q2 2026 Form 10-Q]· primary
Tax rate23.0%high
How derived: The rate increased from 0.221 in 2025 to 0.228 in the first half of 2026, so 0.23 represents a normalized rate with neither unusually favorable credits nor a major adverse tax change.
Why this confidence: Assumption closely matches the latest reported rate ↑, State-law changes can create periodic deviations ↓
No tracked driver measures this assumption yet.
Evidence for
- The first-half 2026 effective tax rate was 0.228, closely supporting a normalized 0.23 assumption.[Union Pacific Q2 2026 Form 10-Q]· primary
Evidence against
- The full-year 2025 effective rate was lower at 0.221 because of state-law changes and purchased tax credits.[Union Pacific 2025 Form 10-K]· primary
Reinvestment rate32.0%medium
How derived: Cash capital spending equaled about 0.155 of revenue in 2025 but the 2026 plan fell to 3.3 billion dollars, so the base case assumes replacement spending remains heavy while productivity and existing capacity limit incremental investment to 0.32 of after-tax operating profit.
Why this confidence: Current capital plan and detailed spending mix ↑, Working-capital needs and future lease buyouts are uncertain ↓
Measured by
- Annual freight-car velocity225 miles per car per dayreported
- Annual cash capital investment as a share of revenue15.5%derived
Evidence for
- The company plans approximately 3.3 billion dollars of 2026 capital investment for replacement, resilience, growth projects, rolling stock, and technology.[Union Pacific Q2 2026 Form 10-Q]· primary
Evidence against
- Actual cash capital investment rose to 3.791 billion dollars in 2025 and included substantial infrastructure replacement and lease buyouts.[Union Pacific 2025 Form 10-K]· primary
Terminal growth2.3%low
How derived: The railroad has pricing power and exposure to broad freight activity but remains a mature, cyclical network, supporting a long-run rate above the bear case yet below the near-term revenue path.
Why this confidence: Established pricing power and diversified freight mix ↑, Terminal assumptions extend beyond observable guidance ↓
Measured by
- Annual revenue carloads8,447 thousand carloadsreported
Evidence for
- Management expects pricing dollars above inflation and is investing in intermodal ramps, terminal capacity, sidings, and technology to attract additional carloads.[Union Pacific Q2 2026 results]· primary
Evidence against
- Revenue advanced just 0.005 in 2024 and 0.011 in 2025, illustrating the mature and cyclical nature of the business.[Union Pacific 2025 Form 10-K]· primary
Bull
low confidence$198.97
IV / share
-31.2% vs $289.15
- Explicit cash flows
- $48.50
- Terminal value
- $150.47
- Net cash
- $0.00
- Intrinsic value / share
- $198.97
75.6% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
Revenue growth8.0% → 6.0% → 5.0% → 4.0% → 3.0%low
How derived: The latest quarter combined 0.12 reported revenue growth, 0.04 freight growth excluding fuel, domestic intermodal growth of 0.19, and Mexico revenue growth of 0.10, so the bull case assumes business wins and network capacity sustain above-normal growth before moderation.
Why this confidence: Strong recent intermodal and Mexico growth ↑, Assumes business wins persist through a freight cycle ↓
Measured by
- Annual revenue carloads8,447 thousand carloadsreported
Evidence for
- Domestic intermodal carloads increased 0.19, Mexico revenue increased 0.10, grain remained strong, and management cited increasing customer demand.[Union Pacific Q2 2026 Form 10-Q]· primary
Evidence against
- Total quarterly volume increased only 0.02, international intermodal declined 0.14, coal declined 0.17, and management called the economic forecast mixed.[Union Pacific Q2 2026 results]· primary
Operating margin43.0%low
How derived: Starting from a margin near 0.40, this case assumes pricing above inflation plus record network fluidity, longer trains, better fuel consumption, and higher workforce productivity lift the mature margin to 0.43.
Why this confidence: Broad improvement across operating metrics ↑, Target is materially above recent reported profitability ↓
Measured by
- Annual operating profit margin40.2%derived
- Annual freight-car velocity225 miles per car per dayreported
- Annual cash capital investment as a share of revenue15.5%derived
Evidence for
- Management reaffirmed pricing above inflation and operating-ratio improvement, while the quarter delivered 0.05 better freight-car velocity, 0.07 lower terminal dwell, and 0.05 higher workforce productivity.[Union Pacific Q2 2026 results]· primary
Evidence against
- Despite productivity gains, the second-quarter operating ratio worsened by 0.007 because of higher fuel prices, inflation, traffic costs, and acquisition expenses.[Union Pacific Q2 2026 Form 10-Q]· primary
Tax rate22.0%medium
How derived: The 2025 effective rate was 0.221 and the latest quarter was 0.22, so the bull case assumes recurring tax planning and state-law benefits hold the normalized rate near those reported levels.
Why this confidence: Matches recent full-year and quarterly reported rates ↑, Depends partly on favorable tax items continuing ↓
No tracked driver measures this assumption yet.
Evidence for
- The full-year 2025 effective tax rate was 0.221 and the second-quarter 2026 rate was 0.22.[Union Pacific Q2 2026 Form 10-Q]· primary
Evidence against
- The first-half 2026 effective rate was higher at 0.228, and prior favorable rates included discrete state-law and deferred-tax benefits.[Union Pacific Q2 2026 Form 10-Q]· primary
Reinvestment rate27.0%low
How derived: The company is handling more ton-miles with faster cars, longer trains, a smaller workforce, and a lower 2026 capital plan, so this case assumes unusually strong asset utilization allows growth while reinvesting only 0.27 of after-tax operating profit.
Why this confidence: Measured asset and workforce productivity gains ↑, High growth with low reinvestment requires exceptional capital efficiency ↓
Measured by
- Annual freight-car velocity225 miles per car per dayreported
- Annual cash capital investment as a share of revenue15.5%derived
Evidence for
- Year-to-date revenue ton-miles increased 0.05 while freight-car velocity improved 0.07, locomotive productivity improved 0.04, and average employee levels fell 0.04.[Union Pacific Q2 2026 Form 10-Q]· primary
Evidence against
- The network still required 3.791 billion dollars of cash capital investment in 2025, and roughly 1.987 billion dollars went to road-infrastructure replacement alone.[Union Pacific 2025 Form 10-K]· primary
Terminal growth2.8%low
How derived: This case assumes durable inflation-plus-volume growth as domestic intermodal wins, Mexico trade, and capacity projects offset long-run coal weakness, producing a mature rate modestly above the base case.
Why this confidence: Multiple identifiable growth channels ↑, Multi-decade persistence is inherently uncertain ↓
Measured by
- Annual revenue carloads8,447 thousand carloadsreported
Evidence for
- Domestic intermodal expanded 0.19 in the latest quarter, Mexico revenue increased 0.10, and planned terminal, siding, and mainline projects are intended to add carloads.[Union Pacific Q2 2026 Form 10-Q]· primary
Evidence against
- Coal carloads declined 0.17 and international intermodal declined 0.14 in the latest quarter, demonstrating structural and trade-related risks to sustained volume growth.[Union Pacific Q2 2026 Form 10-Q]· primary
Valuation robustness
reliability of the estimate, not a stock rating68 / 100 · Moderate
Formula v1.0.0. Higher means a more reliable estimate — not a recommendation.
Quality checks
Automated model-risk flags — warnings, not recommendations.
- 74% of the intrinsic value rests on the terminal value — a small change to terminal growth moves the valuation a lot.→ terminal growth
- The terminal growth assumption is low-confidence.→ terminal growth
Per-share economics
Business growth after changes in the diluted share count.
| Period | Revenue growth | FCF/share | FCF/share growth | Shares | Share growth |
|---|---|---|---|---|---|
| Q3 2024 | 2.5% | 2.99 | 58.4% | 608.6M | -0.2% |
| Q1 2025 | -0.1% | 2.17 | -0.2% | 601.9M | -1.4% |
| Q2 2025 | 2.4% | 2.35 | 42.1% | 594.8M | -2.5% |
| Q3 2025 | 2.5% | 2.65 | -11.4% | 593.2M | -2.5% |
| Q1 2026 | 3.2% | 2.53 | 16.9% | 593.6M | -1.4% |
| Q2 2026 | 11.5% | 3.71 | 57.9% | 594M | -0.1% |
Valuation history every run
History builds as the valuation is recalculated — this is the first recorded run.
Market inputs researched
The value is the U.S. Treasury's 10-year par yield reported for 2026-09-04, the latest completed trading day before this analysis.
Yahoo Finance reported UNP's five-year monthly beta as 0.96, a market-data estimate based on historical share-price sensitivity.
NYU Stern's Aswath Damodaran reported a 0.0418 trailing-twelve-month adjusted-payout implied U.S. equity risk premium as of 2026-07-01.
The value is UNP's regular-session closing price on 2026-09-04, the latest completed trading day before this analysis.
Generated 9/6/2026, 4:17:19 AM · pipeline v1.2.0