What Does Union Pacific Corporation’s (NYSE:UNP) Share Price Indicate?
Today we’re going to take a look at the well-established Union Pacific Corporation (NYSE:UNP). The company’s stock saw a decent share price growth in the teens level on the NYSE over the last few months. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s examine Union Pacific’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. See our latest analysis for Union Pacific
What is Union Pacific worth?
According to my valuation model, Union Pacific seems to be fairly priced at around 5% above my intrinsic value, which means if you buy Union Pacific today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $127.16, there’s only an insignificant downside when the price falls to its real value. In addition to this, it seems like Union Pacific’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What does the future of Union Pacific look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Union Pacific, at least in the near future.
What this means for you:
Are you a shareholder? UNP seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on UNP for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on UNP should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Union Pacific. You can find everything you need to know about Union Pacific in the latest infographic research report. If you are no longer interested in Union Pacific, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
