Robert Lauzon Union Pacific Corp UNP-N BUY Sep 01, 2023

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.

Been on a downtrend, though fairly priced. Earnings need to beat for shares to also rise. Trades at 18x forward PE and a PEG ratio of 1.7. A tailwind is US capex spending and all those materials that need transporting, like steel.

His concern is its 18x forward PE. A railroad stock can grow only so much more than GDP. Pricing power is limited. He needs to see earnings outperform.

Transports haven't seen a tailwind lately. Has the sector bottomed? The timing is tough for transports now.

He sold UNP to buy Wabtec, because the former services only one geography while Wabtec goes everywhere.

Operating income in Q4 +5% to $2.5 billion. Was held back by tariff talks; tariffs will hurt, but they have room to move with better volume and pricing. He targets $275.

Her choice in the space. Better cost management, strong network efficiencies, favourable long-term profit trend.