U.S. Markets closed
  • S&P 500

    3,900.78
    -22.90 (-0.58%)
     
  • Dow 30

    31,253.13
    -236.94 (-0.75%)
     
  • Nasdaq

    11,388.50
    -29.66 (-0.26%)
     
  • Russell 2000

    1,782.50
    +7.65 (+0.43%)
     
  • Crude Oil

    111.36
    +1.77 (+1.62%)
     
  • Gold

    1,841.60
    +25.70 (+1.42%)
     
  • Silver

    21.87
    +0.34 (+1.57%)
     
  • EUR/USD

    1.0591
    +0.0125 (+1.1968%)
     
  • 10-Yr Bond

    2.8550
    -0.0310 (-1.07%)
     
  • Vix

    29.30
    -1.66 (-5.36%)
     
  • GBP/USD

    1.2490
    +0.0148 (+1.2016%)
     
  • USD/JPY

    127.7340
    -0.5630 (-0.4388%)
     
  • BTC-USD

    29,969.21
    +692.78 (+2.37%)
     
  • CMC Crypto 200

    666.42
    +14.19 (+2.18%)
     
  • FTSE 100

    7,302.74
    -135.35 (-1.82%)
     
  • Nikkei 225

    26,402.84
    -508.36 (-1.89%)
     

Union Pacific (UNP) Stock Hits Fresh 52-Week High: Here's Why

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·3 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Shares of Union Pacific Corporation UNP reached a 52-week high of $250.33 on Dec 28, before retracing a bit to close the day at $249.23. Moreover, the stock has gained 23.3% in a year, outperforming the industry’s 18.9% increase.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

Catalysts Behind the Price Surge

With improved freight market conditions, higher freight revenues drove the Union Pacific stock up. UNP’s freight revenues, which account for the bulk of its top line, have improved 11% year over year in the first nine months of 2021. Segment-wise, freight revenues in the first nine months of 2021 increased 10%,9% and 14% in the bulk, industrial and premium units, respectively.

Owing to strength in its operations, Union Pacific has been resorting to shareholder-friendly activities. In December, the company hiked its quarterly dividend by 10%. This was the second dividend hike announced by the company this year. In the first nine months of 2021, the company returned $7.9 billion to its shareholders through dividends ($2 billion) and buybacks ($5.9 billion). UNP anticipates repurchasing shares worth roughly $7 billion in 2021. It expects a dividend payout of approximately 45% (of earnings) in 2021. These shareholder-friendly activities are also expected to have boosted the stock.

Union Pacific’s strong free cash flow generation capacity supports its shareholder-friendly activities. Free cash flow increased 37.6% year over year to $2,666 million in the first nine months of 2021. Cash flow conversion rate is a healthy 95%.

Union Pacific’s measures to enhance productivity are also expected to have buoyed its share price. The company’s productivity savings in 2020 were $708 million. In 2021, it expects productivity savings of $350 million. The anticipated reduction in savings is due to weather- and network-related issues rather than any fundamental problem associated with UNP. The company aims to achieve roughly $1.8 billion in productivity since the implementation of the precision scheduled railroading model in 2018.

Zacks Rank & Key Picks

Union Pacific carries a Zacks Rank #3 (Hold).

Here are some better-ranked stocks within the broader Transportation sector:

ArcBest Corporation ARCB flaunts a Zacks Rank #1 (Strong Buy). The company has a stellar earnings surprise history. It has outperformed the Zacks Consensus Estimate for earnings in each of the preceding four quarters, the average surprise being 27.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of ArcBest have surged more than 100% in a year’s time.

Expeditors International of Washington EXPD carries a Zacks Rank #1. The company’s earnings have outperformed the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 29.1%.

Shares of Expeditors have appreciated more than 41% so far this year.

Schneider National SNDR carries a Zacks Rank #2 (Buy). The company’s earnings have trumped the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 21%.

Shares of Schneider National have rallied more than 31% so far this year.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Union Pacific Corporation (UNP) : Free Stock Analysis Report

Expeditors International of Washington, Inc. (EXPD) : Free Stock Analysis Report

ArcBest Corporation (ARCB) : Free Stock Analysis Report

Schneider National, Inc. (SNDR) : Free Stock Analysis Report

To read this article on Zacks.com click here.