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Quote this valuation with its source: Fair value, Potential value and the price at analysis.
FAQ
UNP — frequently asked questions
Is Union Pacific Corporation overvalued?
In our latest published analysis dated 2026-09-25, UNP looks meaningfully overvalued. The price recorded at analysis is 274 USD versus our fair value of 184 USD; the high endpoint is presented separately as potential value of 226 USD. That implies roughly 32.9% downside to fair value at that date.
Our latest published report, analyzed 2026-09-25, gives UNP a fair value of 184 USD and a potential value of 226 USD. The conclusion is triangulated across multiple valuation models and weighted by reliability for Union Pacific Corporation's archetype; it is a dated research output, not a live price.
Should I buy UNP now?
Our latest published rating for UNP, analyzed 2026-09-25, is Sell. Union Pacific Corporation looks meaningfully overvalued at the analysis-date price of 274 USD versus fair value of 184 USD; potential value is 226 USD. This is research for educational purposes, not personalized investment advice.
What are the biggest risks for UNP?
The dedicated bear-case section in our report analyzed 2026-09-25 documents Union Pacific Corporation's material risks, evidence, thresholds, and thesis-invalidation conditions. Scenario-specific explanations remain in that section so the report does not repeat or decontextualize them elsewhere.
What is UNP's rating?
Our latest published rating for UNP, analyzed 2026-09-25, is Sell, with a published moat assessment of 9/10 (Wide). It reflects our fair value of 184 USD, the potential value of 226 USD, and the price recorded at analysis (274 USD).
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§1 Podsumowanie wykonawczeEN
Odpowiedź w 30 sekundSell
Cena a wartość
Cena
$274.07
Wartość godziwa
$184.01
Wartość potencjalna
$226.07
Stan na
2026-09-24
Dlaczego to może zadziałać
The greatest commercial opportunity lies in accelerating cross-border freight traffic through enhanced trackage partnerships with Canadian National into Mexico.
We assign a Sell rating to Union Pacific Corporation. While the company operates a premier Class I rail franchise with wide-moatpricing power, the market price significantly overstates sustainable earnings growth and capital return potential.4,7
Our house rating is Sell. For an ordinary investor, this recommendation indicates that capital should be reallocated away from the stock into more attractively priced industrial alternatives, as the current valuation offers unfavorable risk-adjusted return prospects over a 12 to 24 month horizon.
This report was prepared at a share price of $274.07 as of September 24, 2026. The house conclusion establishes a Fair value of $184.01 and a of $226.07. The report-date price trades at an extensive 48.9% premium above Fair value, representing an expected downside of 32.9% to our central valuation, and remains substantially above our high-end Potential value.
The primary risk to our negative thesis is an accelerated industrial demand cycle that expands volumes faster than projected. If manufacturing nearshoring along the Mexican border expands freight traffic, Union Pacific could absorb higher carloads across its latent train capacity without proportionate cost increases. A reader would see this unfolding through sustained carload volume growth exceeding 4% year-over-year, operating margins widening beyond 41.5%, and annual free cash flow surging toward $6.5B as capital expenditures normalize ahead of schedule.1,5,6
The business continues to execute strong commercial operations, generating $23.22B in freight revenue in FY2025 across non-replicable western routes and sustaining a 40.17% operating margin via Precision Scheduled Railroading. Management has achieved eight consecutive quarters of record workforce productivity while advancing key bottleneck expansions in Houston and the Pacific Northwest. Once these projects conclude, lower reinvestment requirements can release over $1.3B in incremental cash for share buybacks, supporting earnings per share growth toward our Potential value of $226.07. However, this upside remains secondary to the substantial valuation gap against our central Fair value of $184.01.5,6,7
Irreplaceable Western Rail Franchise and Duopoly Pricing
The company operates a contiguous 32,000-mile network across 23 western states that cannot be duplicated. This right-of-way scale protects 100% car order fulfillment across core industrial lines and supports firm freight pricing without aggressive discounting.5,7
Capacity Debottlenecking Precedes Capital Spending Normalization
Current elevated capital spending of $3.79B (15.5% of revenue) funds high-return double-tracking and siding extensions in Houston and the Sunset corridor. Once complete, capex normalizing toward maintenance levels of ~$2.46B can unlock over $1.3B in annual free cash flow for buybacks.5,6
Cross-Border Industrial Growth and Nearshoring Corridors
Strategic commercial agreements with Canadian National enhance competitive access to Mexican gateways against CPKC. Supported by an active pipeline of approximately 200 industrial development project requests, new facility connections including Hyundai Steel and AGP grain reinforce volume growth.5
Rekomendacja domu
Sell: Union Pacific operates an exceptional rail duopoly with structural 40% operating margins, but the share price of $274.07 trades at an unjustified 48.9% premium above our Fair value of $184.01.4,6
Przegląd spółki
Union Pacific Railroad Company is the principal operating company of Union Pacific Corporation. One of America's most recognized companies, Union Pacific Railroad Company connects 23 states in the western two-thirds of the country by rail, providing a critical link in the global supply chain. The Railroad’s diversified business mix includes Bulk, Industrial, and Premium.
UNION PACIFIC CORP operates an emergency response management center 24 hours a day. The center receives reports of emergencies, dangerous or potentially dangerous conditions, and other safety and security issues from its employees, the public, law enforcement, and other government officials.
§2 Scenariusz negatywnyEN
In a severe stagflationary freight recession, carload volumes contract by 5% as manufacturing and automotive production weaken, while employee compensation escalates at 7% annually and fuel costs surge, imposing an operating ratio drag exceeding 120 bps. Concurrently, annual capital expenditures remain locked above $3.79B due to contractual siding commitments in Houston and Sunset corridors, preventing capex from falling to maintenance levels (~65% of capex / $2.46B). With total debt of $31,168,999,424 facing refinancing at pre-tax debt costs of 5.76%, annual interest expense rises by $40M-$60M, compressing net margins below 25% and reducing free cash flow conversion. Under these combined shocks, equity value approaches the downside valuation boundary of $153.08.
Capital intensity remaining elevated above historical maintenance baselines due to ongoing network commitments
Curtailment of discretionary share repurchase activity to protect balance sheet liquidity
The Bear scenario models an industrial freight downturn where carload volumes contract across major manufacturing, construction, and automotive sectors. Overcapacity in highway trucking creates aggressive price competition for domestic intermodal loads, while union wage inflation and elevated fuel volatility compress the operating ratio. Network bottleneck projects encounter construction delays and cost overruns, preventing capital expenditures from normalizing to maintenance levels. Under these stagflationary pressures, cash earnings power degrades and valuation multiples de-rate, leading to significant downside from $274.07 toward $184.01.
Jak ta teza może się załamać
Macroeconomic freight downturn combined with union wage inflation compresses operating margins below 37.0%.
Reported operating margins fell to 37.65% in FY2023, while 2026Q2 experienced 7% employee cost inflation and 120 bps fuel headwinds. An operating margin print below 37.0% shatters the 40.2% PSR margin thesis floor, reducing fair value by 18.5%.5,6
FV impact
0%
Operating margin 3 points lower throughout
Sygnały wczesnego ostrzegania do monitorowania
Pięć zdarzeń, które osłabiłyby naszą tezę inwestycyjną.
Operating margin dropping below 37.0% indicates that union labor inflation (+7% per employee) and fuel volatility are overwhelming Precision Scheduled Railroading efficiencies and pricing power.
Obecnie:40.17% (FY2025) / 40.25% (2026Q2)
Alarm, jeśli< 37.0%
§3 Przewaga konkurencyjnaEN
Wide
Union Pacific possesses a Wide economic moat derived from its irreplaceable 32,000-route-mile rail network across 23 western states, connecting Pacific Coast and Gulf ports with Midwestern rail hubs and six Mexican cross-border gateways. This contiguous infrastructure asset cannot be duplicated under any plausible commercial scenario due to insurmountable right-of-way acquisition costs, stringent environmental permitting, and capital expenditure barriers. The company generates strong returns on invested capital of 15.59%, substantially higher than its computed WACC of 8.35% and moderate cost of equity of 9.09%.
Franchise scale and regional duopoly dynamics underpin durable pricing power and operating leverage. Core product cargo and freight revenue reached $23,220M in FY2025, representing 94.74% of consolidated revenue of $24,510M. Operating margins of 40.17% in FY2025 and 40.25% in 2026Q2 demonstrate structural profitability advantages over highway motor carriers and eastern rail peers such as CSX (38.42% operating margin) and Norfolk Southern (35.30%). Strict adherence to Precision Scheduled Railroading disciplines and double-digit fuel efficiency differentials protect operating profit across business cycles.
High customer integration further solidifies the moat through switching costs. Industrial shippers, chemical refineries, and grain elevators invest tens of millions of dollars in private sidings and dedicated loading infrastructure directly connected to Union Pacific lines. Once integrated, transitioning freight to alternative rail carriers is structurally impossible without dual trackage access, while highway trucking lacks the ton-mile economics to move bulk freight over long haul routes, leaving customer retention exceptionally high.
Zysk ekonomiczny
Union Pacific consistently generates substantial economic profit, with ROIC of 15.59% maintaining a healthy spread of 724 basis points over its computed WACC of 8.35% and 650 basis points over its cost of equity of 9.09%. This economic profit is underpinned by structural 40.17% operating margins and $7,138M in net income.2,6
9/ 10
Wide
Sources of advantage
01Network exclusivity and geographic right-of-way scale — Irreplaceable 32,000-route-mile network spanning 23 western US states connecting Pacific ports and Mexican border crossings to Midwest gateways. Product cargo and freight revenue generated $23,220M (94.74% of revenue) in FY2025, insulated from eastern rail competition.Wide
02Cost advantage via heavy-haul train length and route density — Rail achieves 3-4x greater ton-mile fuel efficiency than long-haul trucking, supporting operating income of $9,846M and a 40.17% operating margin in FY2025. Management has achieved eight consecutive quarters of record workforce productivity and utilizes latent capacity in train starts before adding costs.
Znane zagrożenia dla przewagi
Zagrożenie
Powaga
Oś czasu
Złagodzenie
Surface Transportation Board regulatory scrutiny over gateway access and reciprocal switching
medium
12 to 24 months
Proactive coordination on interchange access, including Canadian National partnership addressing 3:2 and 2:1 shippers and Kansas City gateway fluidity.5
The highlighted cell is Fair value when every assumption sits at its base level ($184.01). Each row and column shows what Fair value becomes when one assumption moves.
Operating margins sustained near historical levels through strict fuel efficiency and workforce productivity
Capital expenditures gradually normalizing toward recurring maintenance levels over the multi-year forecast horizon
Regular annual share repurchases retiring a steady portion of diluted share count alongside growing dividend distributions
The Base case represents the modal operating path where Union Pacific sustains steady revenue expansion underpinned by essential agricultural, chemical, and intermodal freight corridors. Pricing power across the western duopoly keeps operating margins stable through Precision Scheduled Railroading discipline and workforce productivity. Siding extensions and terminal projects gradually eliminate network bottlenecks, allowing capital spending to normalize toward maintenance levels and releasing discretionary free cash flow for systematic share repurchases and regular dividend increases. Under this path, the projected valuation outcome is $184.01, reflecting a probability weighting of 60.0% and an expected return of -32.9% relative to $274.07 (as of 2026-09-24).
Upgrade the rating; Re-examine whether improved carload velocity warrants an upward revision to medium-term revenue forecasts, but refrain from capital allocation while shares trade above $184.01.
Wyzwalacz: Diluted earnings per share and carload volume outperforming consensus expectations, accompanied by operating ratio improvement
A quarterly earnings beat driven by volume growth and surcharge capture would confirm operational execution, prompting an upgrade to Reduce, though the share price at $274.07 remains at an extensive premium to $184.01.
Zgodnie
Maintain Sell; Maintain disciplined positioning; use share price resilience near $274.07 to rebalance capital into lower-valuation industrial alternatives.
Wyzwalacz: Quarterly revenue and operating ratio tracking consensus expectations within normal operational variation
Meeting quarterly consensus confirms steady operations under Precision Scheduled Railroading, yet leaves the wide valuation gap unresolved as the market continues to price in growth above sustainable freight rail baselines.
Poniżej
Maintain Sell; Accelerate portfolio re-allocation away from the equity; monitor carload volume checkpoints and capex absorption for signs of structural operational de-rating.
Wyzwalacz: Operating margin contraction driven by union wage inflation or fuel surcharges lagging expenses, coupled with carload volume decline
An earnings miss caused by margin deterioration or industrial freight volume weakness would validate the core downside thesis, accelerating valuation multiple convergence toward $184.01.
Jakość wyników
Earnings quality is robust, characterized by high cash flow conversion and conservative accounting practices across Class I rail operations. Operating cash flow reliably backs net income, with negligible dependence on non-cash accruals or aggressive working capital adjustments. Depreciation schedules match the long operating life of track infrastructure, rolling stock, and locomotives, while stock-based compensation remains a modest fraction of consolidated revenue. Working capital requirements are minimal given immediate freight settlement terms, and revenue recognition aligns strictly with completed freight transportation milestones.
Metryki do obserwacji przed publikacją
01
Wskaźnik:
Operating Ratio and Margin Preservation
BieżącyOperating ratio remains near historical best levels, but faces persistent pressure from employee wage and benefit inflation alongside diesel fuel price fluctuations.
Dlaczego to ważne
Measures core operating efficiency under Precision Scheduled Railroading; an increase in the operating ratio reveals wage inflation or fuel headwinds outpacing pricing power, eroding operating profit and cash generation.
02
Wskaźnik:
Carload Freight Volume and Order Fulfillment
BieżącyCar orders reflect complete fulfillment across industrial business lines, with positive momentum in intermodal offsetting softness in automotive shipments.
Union Pacific demonstrates robust cash generation from operations, delivering operating cash flow of $9,290M in FY2025 compared to $7,525M in FY2016. Capital expenditure totaled $3,791M in FY2025, representing 15.47% of revenue, well above historical free cash flow baselines such as the $4,020M generated in FY2016. However, analyzing capex composition reveals that approximately $2,464M (65%) is recurring network maintenance (~1.0x depreciation of $2,465M), while $1,327M represents discretionary capacity expansion in siding extensions, double-tracking, and terminal yards. This yields normalized Owner Earnings of $7,138.85M ($12.02 per share) on GAAP net income of $7,138M. As current debottlenecking programs conclude over the next 2-3 years, capital spending will gravitate toward maintenance levels, releasing substantial free cash flow.4
Return on invested capital sits at 15.59%, reflecting high capital productivity under Precision Scheduled Railroading. Operating margin has stabilized at 40.17% in FY2025 and 40.25% in 2026Q2, recovering from the 37.65% cyclical low in FY2023. Although current elevated capex ($3,791M in FY2025) expands the invested capital base, incremental returns from double-tracking and siding extensions support steady ROIC.
ROIC of 15.59% generates a strong 724 basis point economic spread above the computed WACC of 8.35% and 650 basis points above the cost of equity of 9.09%. This positive economic profit confirms that Union Pacific compounds shareholder value through its capital reinvestment program.
Union Pacific Corporation (UNP) trades at 19.3x forward earnings against a peer median of 18.3x. Its EV/EBITDA of 14.9x compares with a peer median of 14.7x. The comparison uses 4 peers: Lockheed Martin Corporation, CSX Corporation, Norfolk Southern Corporation and FedEx Corporation, as of 2026-09-25.
§10 Branża i cyklEN
Faza cyklu
Expansion
Union Pacific is currently in an active capital investment phase, with FY2025 capex of $3,791M representing 15.47% of revenue and a capex-to-depreciation ratio of 1.54x. This compares to the broader Class I rail industry capex-to-revenue benchmark of 6.5% and capex-to-depreciation benchmark of 1.63x. Current outlays fund major bottleneck elimination projects including the Houston terminal complex, Sunset corridor double-tracking, and Pacific Northwest siding extensions.5,6
Cykl byczy
The freight rail bull cycle is driven by nearshoring along the US-Mexico border, industrial manufacturing reshoring, and intermodal freight conversions from over-the-road trucking due to rail's 3-4x fuel advantage. In an upcycle, network velocity accelerates, train lengths expand, and incremental freight volume drops through to operating income at 50%+ incremental margins, lifting operating margins toward 42.8% as seen in FY2021.
Cykl niedźwiedzi
The freight rail bear cycle is characterized by industrial destocking, automotive supply chain disruptions, and trucking freight overcapacity that depresses spot market truckload rates, causing marginal intermodal shippers to switch to highway transport. Rising labor costs (+7% per employee) and diesel price spikes squeeze the operating ratio, while heavy fixed infrastructure costs compress operating margins toward the 36%-37% historical trough.
Trendy długoterminowe
Trend
Wpływ
Uwaga
North American Nearshoring and US-Mexico Cross-Border Trade
positive
Manufacturing relocation to Mexico accelerates cross-border freight traffic across Union Pacific's six gateway interchanges. Strategic interchange cooperation with Canadian National enhances competitiveness against CPKC's single-line network.
Decarbonization and Over-the-Road to Rail Freight Conversion
positive
Rail produces up to 75% fewer greenhouse gas emissions per ton-mile than long-haul trucking, driving corporate logistics ESG conversions into domestic intermodal corridors.
Pozycjonowanie
Union Pacific occupies the premier western rail network franchise, originating and terminating 94.74% of revenue through its core Cargo and Freight franchise ($23,220M in FY2025). With a 40.17% operating margin, it outperforms eastern peers CSX (38.42%) and Norfolk Southern (35.30%), while freight logistics operators such as FedEx generate only 11.13% operating margins. Union Pacific's network scale and 100% car order fulfillment position it to capture industrial growth across ~200 active RFI development projects.3,5,6,7
§11 Zarządzanie pozycjąEN
Wielkość pozycji
0%
Given the house Sell rating and the significant downside from the analysis share price of $274.07 as of 2026-09-24 toward the synthesized fair value of $184.01, an equity allocation of 0% is recommended. Capital should be preserved or deployed into industrial opportunities offering positive margins of safety rather than holding an overvalued Class I rail position.4
Ryzyko
Portfolio risk management requires strict discipline around position liquidation under a Sell recommendation. Investors holding legacy positions in Union Pacific should execute orderly exit programs using limit orders near the share price of $274.07 as of 2026-09-24 rather than waiting for earnings events that risk sharp multiple compression. The primary risk to an outright underweight or short stance is a sustained nearshoring freight boom driving carload volumes above expectation, which could temporarily support premium multiples (forward P/E of 19.34x). This risk is managed by maintaining strict trailing stop disciplines at 5% and monitoring carload volume trends across Mexican gateway interchanges.
Transze wejścia
Poziom
Działanie
Dlaczego
$184.00
Initiate initial monitoring / watchlist tranche
Represents convergence with the synthesized Fair value midpoint ($184.01), eliminating the current valuation premium and anchoring entry to normalized Owner Earnings power of $12.02 per share.
Reaffirm Sell rating and lower the fair value range midpoint toward $165-$170, as margin degradation confirms thesis risk regarding wage and fuel cost absorption.5
to Depreciation Ratio
§12 Perspektywy inwestorówEN
Value Investor
Avoid
Union Pacific shares trade at 19.34x forward earnings, trading at a premium to FedEx (13.40x) while trading slightly below CSX (20.67x). The share price of $274.07 sits at a 48.9% premium above our Fair value of $184.01, offering zero margin of safety against cyclical freight shocks.3,4
Income and Dividend Investor
Avoid
Although Union Pacific maintains a dependable $5.68 annual dividend per share (44.7% payout ratio), the dividend yield of roughly 2.1% is insufficient compensation for a 32.9% capital downside to our Fair value of $184.01. Capital depreciation risks far outweigh dividend cash flows over a 12 to 24 month horizon.4,6
Institutional and Growth Investor
Avoid
Current market pricing of $274.07 implies an earnings per share growth rate of 7.6% over the next decade. With consensus projecting revenue growth slowing from 9.31% in FY2026 to 4.36% in FY2027, the railroad lacks the structural volume drivers needed to beat elevated market expectations.1,4
§14 Końcowa rekomendacjaEN
Działanie
Sprzedaj
We recommend an outright Sell on Union Pacific Corporation shares. The report-date share price of $274.07 trades at a 48.9% premium above our Fair value of $184.01, implying that the market is paying for prolonged above-trend freight growth that Class I railroads historically cannot sustain through cyclical turns.4
While Union Pacific demonstrates excellent franchise durability with a 40.17% operating margin and eight consecutive quarters of record workforce productivity, operating headwinds from 7% employee wage inflation and $31.17B in total debt refinancing create downside risks. Investors should take advantage of current pricing to redeploy capital into lower-valuation opportunities.
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Sources
The records this analysis drew on, as they stood when it was run.
Financial statementsData as of 2016-12-31 · Published 2026-09-25 · GAAP · cited for 1 figureCited in Historia finansowa
Not every cited input appears here: internal calculations and intermediate model outputs have no external record, and some citations could not be matched to one.
Consensus expects 9.31% revenue growth in FY2026 and 4.36% in FY2027. Automotive weakness and intense highway trucking competition during a freight slump could push carload volume growth into negative territory, breaking top-line consensus expectations and reducing fair value by 15.0%.1,5
FV impact
-1.3%
Revenue and EPS growth 5 points lower for five years
Trigger
Within 18 months
Elevated capital intensity and higher debt refinancing rates trigger multiple de-rating to 12.8x.
The valuation incorporates a 16.0x terminal P/E multiple relative to current forward P/E of 19.34x. If capex remains elevated near $3,791M and debt refinancing on $31,168,999,424 of debt increases interest expense, market multiples will de-rate 20% toward peer freight logistics levels such as FedEx (13.40x), reducing fair value by 20.0%.3,4,6
Capex-to-D&A remaining above 1.75x demonstrates prolonged capital cycle expansion and construction overruns, preventing free cash flow and Owner Earnings from normalizing toward $7.14B.
Obecnie:1.54x ($3,791M capex / $2,465M D&A in FY2025)
Alarm, jeśli> 1.75x on trailing 12-month basis
04
Carload Yield and Volume Growth
Contraction in carload volumes reveals loss of freight volume in intermodal or merchandise corridors to CPKC or trucking.
Obecnie:100% car order fulfillment with slight car order uptick
Alarm, jeśliCarload volume contraction > 3.0% YoY for two consecutive quarters
05
Compensation Cost per Employee Inflation
Unmitigated wage escalation exceeding 8.0% outstrips rail volume productivity gains, creating an unrecoverable drag on operating income and forcing operating ratio degradation.
Obecnie:+7.0% YoY in 2026Q2
Alarm, jeśli> 8.0% YoY sustained without productivity offset
Wide
03High switching costs from private siding integration and captive industrial connections — Bulk chemical and agricultural shippers invest heavily in on-site rail facilities directly tied to Union Pacific's tracks, supporting 100% car order fulfillment and an active pipeline of ~200 industrial development project RFIs, such as AGP grain and Hyundai Steel.Moderate
Persistent union labor wage inflation and cost-per-employee growth
high
6 to 18 months
Offsetting wage pressure through workforce productivity, Precision Scheduled Railroading discipline, and train length extensions.5
The Bull case envisions accelerated industrial reshoring and nearshoring across Mexican border gateways, delivering above-trend carload growth in automotive, metals, and intermodal corridors. Increased freight density across existing train starts generates significant operating leverage, driving operating margins toward cyclical peak levels. Strategic bottleneck relief in Houston and double-tracking along the Sunset corridor enhance train velocity and network fluidity. Accelerated capital normalization unlocks higher free cash flow, enabling expanded share repurchases and supporting a valuation outcome of $226.07, with a probability of 20.0% and an expected return of -17.5% relative to $274.07.
Dlaczego to ważne
Indicates volume demand across agricultural, industrial chemicals, and intermodal corridors; volume declines signal macroeconomic manufacturing slowdown or freight share loss to competing rail and highway networks.
BieżącyCapital expenditures remain elevated in an active investment cycle focused on major corridor double-tracking and terminal bottleneck elimination.
Dlaczego to ważne
Tracks whether elevated capacity spending on terminal expansions and sidings is transitioning toward maintenance levels; failure to normalize restricts discretionary free cash flow for buybacks and debt service.
04
Wskaźnik:
Cross-Border Gateway Freight Traffic and Rail Alliances
BieżącyStrategic partnership agreements enhance direct routing options and gateway access, supporting international volume growth into the second half of the fiscal year.
Dlaczego to ważne
Measures market share capture in Mexican nearshoring corridors; competitive pressure from rival single-line networks could constrain intermodal volume growth.
05
Wskaźnik:
Workforce Compensation and Productivity Momentum
BieżącyCost per employee reflects negotiated contract increases, requiring continuous operational fluidity and train-start efficiency to offset.
Dlaczego to ważne
Reveals whether ongoing workforce productivity records are successfully neutralizing union contract wage escalation to protect operating margins.
Capital allocation follows a balanced framework prioritizing network safety, dividend growth, and opportunistic share repurchases. In FY2025, operating cash flows funded $3,791M in capital expenditures, $3,236M in common dividends (representing a 44.7% payout ratio on net income of $7,138M), and $2,679M in share buybacks. The dividend stands at $5.68 per share annualized, supported by a healthy debt-to-capital ratio of 16.07% and equity weight of 83.93%. Share repurchases have retired 14.3 million shares between FY2023 and FY2025, with diluted shares currently at 594,075,000. Debt management remains prudent despite total debt of $31,168,999,424, as over 81% of maturities extend beyond Year 5.
Product Cargo and Freight accounted for $23,220M of $24,510M total revenue (94.74%) in FY2025, generating operating income of $9,846M.
Because the vast majority of revenue is tied to captive rail corridors, the company can enforce fuel surcharges and avoid price discounting even in soft freight markets.
Discretionary Growth Capex Masks True Cash Earnings Power
Total capex was $3,791M in FY2025 (1.54x D&A of $2,465M). Normalized maintenance capex of $2,464.15M (~65% of capex) leaves $1,326.85M in discretionary capacity buildouts.
Normalized Owner Earnings reach $7,138.85M ($12.02 per share) on GAAP net income of $7,138M, indicating that reported free cash flow understates normalized cash generation.
Diluted average share count contracted from 610,200,000 in FY2023 to 608,600,000 in FY2024 and 595,900,000 in FY2025, with shares outstanding reaching 594,075,000 as of September 2026.
Total debt stands at $31,168,999,424 with a pre-tax cost of debt of 5.76%, while $1.52B matures within 12 months.
Refinancing low-coupon debt at higher prevailing rates will increase annual interest expense by $40M-$60M, slightly dampening net margin expansion.
Norfolk Southern CorporationNSC
Cena / wartość godziwa
Wartość godziwa185,33 USDReport-date price313 USD
Data oceny
Przewaga konkurencyjnaNarrow
Karta wyników inwestycyjnych55 / 100
FedEx CorporationFDX
Cena / wartość godziwa
Wartość godziwa251,53 USDReport-date price290,36 USD
Data oceny
Przewaga konkurencyjnaNarrow
Karta wyników inwestycyjnych58 / 100
Marża
UNP
Union Pacific Corporation
$163.7B
19.3x
6.4x
14.9x
39.7%
—
LMT
Lockheed Martin Corporation
$120.9B
16.0x
1.6x
14.2x
89.2%
12.0%
CSX
CSX Corporation
$87.0B
20.7x
6.0x
15.4x
24.4%
38.4%
NSC
Norfolk Southern Corporation
$70.3B
21.9x
5.6x
15.3x
17.0%
35.3%
FDX
FedEx Corporation
$66.2B
13.4x
0.7x
8.1x
14.8%
11.1%
Structural Shift Away from Thermal Coal Shipments
negative
Ongoing retirement of coal-fired electricity generation creates secular headwinds for Powder River Basin coal carloads, requiring Union Pacific to replace legacy bulk volumes with industrial chemicals, grain, and intermodal freight.
Surface Transportation Board Regulatory Demands for Common Carrier Service
negative
Heightened regulatory scrutiny on reciprocal switching, demurrage rules, and interchange access in major terminals such as Kansas City bounds pricing power and operational restructuring flexibility.