# Union Pacific (UNP) Sector: Railroads | Field | Value | |---|---| | Price | $297.01 | | Market cap | $176B | | Intrinsic value source | Analysts | | Data as of | 2026-11-10 | | Next earnings | 2027-01-22 (estimate) | Analysts: Bullish Picks: Research only Discount category: Far above intrinsic value ## In short Investors pay a premium for Union Pacific's western rail network and the planned Norfolk Southern merger, and STB approval with steady EPS growth through 2027 can earn it. ## Themes and gap - Themes: Regulation and courts (regulation-legal), Tariffs and trade (trade-tariffs), High debt (leverage) - Gap type: Can close (closable) - Why: The STB comments on November 18, 2026, the Q4 2026 report in January 2027 and the STB decision on the Norfolk Southern merger test whether the premium can be earned. ## About Union Pacific runs the Union Pacific Railroad, a freight railroad with 32,889 route miles in 23 western states of the United States. It connects ports on the Pacific Coast and the Gulf Coast with the Midwest, and it has gateways to Mexico and Canada. It carries bulk goods such as coal, grain and chemicals, industrial goods, and containers and trucks for international and domestic shippers. Its main competitor in the West is BNSF Railway. Revenue was $24.5 billion in 2025 and $20.3 billion in the first nine months of 2026. In July 2025, Union Pacific agreed to buy Norfolk Southern, an eastern railroad, to form the first railroad from coast to coast in the United States. The Surface Transportation Board (STB) must approve the deal. ## Thesis Union Pacific trades at a premium because investors pay for a railroad with few competitors, high margins and steady price increases. It is one of two large railroads in the western United States, and its operating ratio was 59.1% in Q3 2026, the best in the industry by its own measure. Revenue carloads grew 6% in Q3 2026, and diluted EPS rose 16% to $3.49. Investors also pay for the purchase of Norfolk Southern. The deal can create the first railroad from coast to coast, with single-line service on about 10,000 lanes that now use two railroads. For the premium to be earned, four things must be true. The STB must approve the merger without conditions that remove much of its value. Union Pacific expects the deal to close in the second half of 2027. EPS must keep growing at the 3-year target of a high-single-digit to low-double-digit rate through 2027. The operating ratio must improve in the core business, although fuel prices raise it now. After the close, the combined company must carry about $20 billion of new debt and still grow. Comments on the merger are due at the STB on November 18, 2026, and responses on February 16, 2027. The Q4 2026 report, expected in late January 2027, is the next earnings test. The premium can shrink if the STB rejects the merger or adds heavy conditions, if freight volumes fall, or if the integration costs more than planned. ## Checkpoints - Nov 18, 2026: STB comments on the merger due. Status: Pending. Watch: Comments with few requests for conditions from large shippers and railroads pass; strong opposition or requests for large divestitures fail. - Jan 22, 2027 (estimate): Q4 2026 results and 2027 outlook. Status: Pending. Watch: 2026 EPS growth in the high single digits and a 2027 outlook in line with the 3-year EPS target pass; lower volumes or a weaker outlook fail. - 2027 (estimate): STB decision on the Norfolk Southern merger. Status: Pending. Watch: Approval with conditions that keep most of the expected benefits passes; a rejection or heavy conditions fail. ## Balance sheet - Cash: $3.1B - Debt: $30.3B - Net debt: $27.2B - EBITDA, last 12 months: $13.1B - Net debt / EBITDA: 2.1× (medium) - Interest cover: 8.6× - Undrawn credit line: $2.0B, to May 2031 - Debt due within 12 months: $1.3B Union Pacific funds itself mainly with long-term notes. Debt was $30.3 billion at September 30, 2026, down from $31.8 billion at December 31, 2025, and $1.3 billion of it is due within one year. Cash is cash and cash equivalents of $2.2 billion and short-term investments of $0.9 billion. EBITDA is adjusted EBITDA for the 12 months to September 30, 2026, as the company calculates it. Adjusted debt, which adds operating leases, was 2.4 times adjusted EBITDA. Interest cover is operating income divided by interest expense for the first nine months of 2026. The $2.0 billion revolving credit facility runs to May 2031 and was undrawn, and $600 million of the receivables facility was undrawn. Union Pacific paused its buybacks after it agreed to buy Norfolk Southern. It expects to pay about $20 billion in cash for the deal, with new debt and cash from operations. As of 2026-09-30. Sources: - https://www.sec.gov/Archives/edgar/data/100885/000010088526000321/unp-20260930.htm - https://www.sec.gov/Archives/edgar/data/100885/000010088526000319/a2026-10x228xkex991earning.htm ## Dividends - Dividend yield: 1.9% (last 12 months, at the current price) - Paid per share, last 12 months: $5.56 (4 payments) - Current annual rate: $5.68 ($1.42 x 4 a year) - Payout ratio: 45% of the earnings of the last fiscal year (the year ended 2025-12-31) - Latest ex-dividend date: 2026-08-31, $1.42 per share - Growth over the last 5 years: 6.4% a year - Growth over the last 10 years: 9.7% a year Dividends per share by year: 2016: $2.255, 2017: $2.48, 2018: $3.06, 2019: $3.70, 2020: $3.88, 2021: $4.29, 2022: $5.08, 2023: $5.20, 2024: $5.28, 2025: $5.44. Source: company filings and market data, read on 2026-11-09. ## Recent events - 2026-10-22: Union Pacific reported Q3 2026 results. Revenue rose 15% to $7.2 billion, with 6% more revenue carloads and a higher fuel surcharge. Net income rose 16% to $2.1 billion, and diluted EPS rose 16% to $3.49. The operating ratio was 59.1%; higher fuel prices added 1.4 percentage points. Union Pacific kept its outlook for high-single-digit EPS growth in 2026 and set its 2026 capital plan at $3.5 billion. - 2026-10-16: Union Pacific said that Jennifer Hamann plans to retire as Executive Vice President and Chief Financial Officer in early 2027. - 2026-09-18: The STB denied motions from several parties that asked it to dismiss the merger application. - 2026-08-18: The STB adopted a procedural schedule for the Union Pacific and Norfolk Southern merger and removed the case from abeyance. Comments are due on November 18, 2026, and responses on February 16, 2027. The STB will set the date of a public hearing later. - 2026-07-23: Union Pacific reported Q2 2026 results. Revenue rose 12% to $6.9 billion, and diluted EPS rose 7% to $3.36. The operating ratio was 59.7%; higher fuel prices added 1.2 percentage points. - 2026-05-28: The STB accepted the revised merger application as complete, but it held the case in abeyance until the railroads gave more information. The railroads completed this information on July 27, 2026. - 2026-04-30: Union Pacific and Norfolk Southern filed a revised merger application with the STB, after the STB said on January 16, 2026 that the first application was not complete. - 2026-04-23: Union Pacific reported Q1 2026 results. Revenue rose 3% to $6.2 billion, carloads fell 1%, and diluted EPS was $2.87, which includes $36 million of merger costs. - 2026-01-27: Union Pacific reported 2025 results. Revenue was $24.5 billion, net income was $7.1 billion and diluted EPS rose 8% to $11.98. The operating ratio was 59.8%, and return on invested capital was 16.3%. - 2025-12-19: Union Pacific and Norfolk Southern filed their merger application with the STB. Each Norfolk Southern share will become one Union Pacific share and $88.82 in cash. ## Latest news and filings - Last earnings: 2026-10-22 (8-K: https://www.sec.gov/Archives/edgar/data/100885/000010088526000319/) - Next earnings: 2027-01-22 (expected; the company has not confirmed it) | Filed | Form | Headline | Period end | XBRL document | Link | | --- | --- | --- | --- | --- | --- | | 2026-10-22 | 10-Q | Quarterly report for the period ended Sep 30, 2026 | 2026-09-30 | unp-20260930 | https://www.sec.gov/Archives/edgar/data/100885/000010088526000321/unp-20260930.htm | | 2026-10-22 | 8-K | Earnings release | | unp-20261022 | https://www.sec.gov/Archives/edgar/data/100885/000010088526000319/unp-20261022.htm | | 2026-10-16 | 8-K | Change of directors or officers and Investor disclosure | | unp-20261016 | https://www.sec.gov/Archives/edgar/data/100885/000010088526000305/unp-20261016.htm | | 2026-07-23 | 10-Q | Quarterly report for the period ended Jun 30, 2026 | 2026-06-30 | unp-20260630 | https://www.sec.gov/Archives/edgar/data/100885/000010088526000250/unp-20260630.htm | | 2026-07-23 | 8-K | Earnings release | | unp-20260723 | https://www.sec.gov/Archives/edgar/data/100885/000010088526000249/unp-20260723.htm | | 2026-05-18 | 8-K | Shareholder vote results | | unp-20260514 | https://www.sec.gov/Archives/edgar/data/100885/000010088526000174/unp-20260514.htm | | 2026-04-23 | 10-Q | Quarterly report for the period ended Mar 31, 2026 | 2026-03-31 | unp-20260331 | https://www.sec.gov/Archives/edgar/data/100885/000010088526000155/unp-20260331.htm | | 2026-04-23 | 8-K | Earnings release | | unp-20260423 | https://www.sec.gov/Archives/edgar/data/100885/000010088526000154/unp-20260423.htm | | 2026-02-06 | 10-K | Annual report for the period ended Dec 31, 2025 | 2025-12-31 | unp-20251231 | https://www.sec.gov/Archives/edgar/data/100885/000010088526000037/unp-20251231.htm | | 2026-01-27 | 8-K | Earnings release | | unp-20260127 | https://www.sec.gov/Archives/edgar/data/100885/000010088526000032/unp-20260127.htm | Every filing on SEC EDGAR (CIK 100885): https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000100885&type=&dateb=&owner=include&count=40 ## Risks - High: The STB must approve the Norfolk Southern merger. Shippers, other railroads and unions can oppose it or ask for conditions. A rejection can cost a termination fee of $2.5 billion in some cases, and heavy conditions can lower the value of the deal. - Medium: The merger needs about $20 billion of cash and about 225 million new shares. New debt makes the balance sheet weaker, and the integration of two large railroads can disrupt service. - Medium: Freight volumes move with the economy, trade and coal demand. Tariffs or a recession can lower carloads. Carloads fell 4% in Q4 2025 and 1% in Q1 2026 before they rose again. - Low: Fuel costs rose 69% in Q3 2026. The fuel surcharge recovers most of this cost with a delay, but high fuel prices raise the operating ratio. - Low: A large derailment or a release of hazardous materials can cause large costs and new rules. ## Links - Page: https://picks.utilarium.app/company/UNP/ - History of changes: https://picks.utilarium.app/company/UNP/history/ - JSON with full history: https://picks.utilarium.app/data/company/UNP.json > Picks is a personal record of stock picks. It gives general opinions about stocks, including a "Top pick" label. They are not tailored to your needs, goals or risk tolerance. Kevin is not a registered adviser and relies on the general-advice exemption in Canadian securities law (NI 31-103 s.8.25). Do your own research, or ask a registered adviser. Kevin may hold any stock on this site. Prices, intrinsic values and ratings can be delayed or wrong; check the original source. Full disclaimer: /disclaimer/.