Opinions
Josh Brown, CEO, Ritholtz Wealth Management
Union Pacific Corp
UNP-N
BUY
Feb 14, 2025
Stock price when the opinion was issued
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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.
UNP 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)
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.