Opinions
David Burrows
Union Pacific Corp
UNP-N
TOP PICK
May 23, 2018
Stock price when the opinion was issued
You might be interested:
They just reported: revenues beat though flat for the year, costs are under control, and they beat earnings. Total volumes were up, including fertilizer up 15%, and industrial chemicals 7%. Their report was better than CSX, though guidance was guarded and mixed, including a muted first half of 2024. It's good to buy now.
Premium contentUNP is Warren Buffet's 2nd favorite railroad to own (he owns BNSF). It has paid its dividend for 125 consecutive years. It is prudently using some cash reserves to aggressively retire debt and buy back shares. It trades at 9x earnings and supports a ROE of 45%. The dividend is backed by a payout ratio of 50% of cash flow. We recommend setting a stop-loss at $207, looking to achieve $268 -- upside potential over 17%. Yield 2.2%
(Analysts’ price target is $267.82)Premium contentPremium content
Transports have perked up recently. There's been a lot of stuff to move in a strong economy. Truckloads are full. Oil prices rise which tip things in favour of the rails. UNP has a great network in the U.S. with 8,500 trains. This is a play on a still-strengthening U.S. economy. They are efficient with cost vs. revenues declining. (Analysts' price target: $147.12)