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Union Pacific's (UNP) Buyback Plan to Grow Shareholders' Wealth

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·3 min read
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In line with its efforts to enhance shareholder value, Union Pacific UNP announced that its board of directors cleared a new share repurchase program to buy back up to 100 million of its common stock.

The new buyback program will be effective Apr 1, 2022, replacing the current repurchase plan, which will expire on Mar 31, 2022. The duration of the new share buyback plan is three years, implying that it will expire on Mar 31, 2025.

Share repurchasing actions are a prudent way of maximizing shareholders’ wealth and generating more value. Union Pacific’s latest stock buyback program indicates its commitment toward delivering a long-term shareholder value, reflecting its confidence in the financial position and the ability to generate sufficient cash flows.

That Union Pacific is extremely active on the buyback front can be gauged from the fact that since announcing its share repurchase program in January 2007, UNP has repurchased 499 million of its outstanding common shares at $48.2 billion through December 31, 2021. The average purchase price is $96.57 per share.

Share buybacks apart, Union Pacific has also been rewarding its shareholders through dividend payments for a while. Evidently, Union Pacific has paid out dividends on its common stock for 123 years at a stretch. In 2021, UNP rewarded its shareholders to the tune of $10.1 billion through share buybacks ($7.3 billion) and dividends ($2.8 billion).

In 2021, Union Pacific, currently carrying a Zacks Rank #2 (Buy), hiked its quarterly dividend twice (each time by 10%). UNP’s strong free cash flow-generating ability supports its shareholder-friendly activities.

Other Stocks to Consider

Investors interested in the Zacks Transportation  sector may also consider Atlas Air Worldwide Holdings AAWW, Danaos Corporation DAC and GATX Corporation GATX, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Atlas Air Worldwide Holdings is the parent company of Atlas Air and Polar Air Cargo, which together operate a fleet of freighter aircraft. AAWW is primarily involved in the airport-to-airport air transportation of heavy freight. AAWW is being supported by strong demand for air freight amid the coronavirus pandemic. The boom in e-commerce trends amid the current scenario is a catalyst.

Over the past 60 days, Atlas Air has seen the Zacks Consensus Estimate for 2022 earnings being revised 8.1% upward. The AAWW stock has appreciated 50.5% in a year’s time.

Danaos is being aided by the bullishness surrounding the containership market. The gradual resumption of economic activities also bodes well for Danaos.

Over the past 60 days, Danaos has seen the Zacks Consensus Estimate for 2022 earnings being revised 39.9% upward. Shares of DAC appreciated more than 100% in a year’s time.

Based in Chicago, IL, GATX is a global railcar lessor with owned fleets in North America, Europe and Asia. Continued recovery in the North American railcar leasing market is expected to drive its growth in 2022. Improved market lease rates and higher asset disposition gains are anticipated to boost profits at the Rail North America segment, which contributes to the bulk of the top line.

Shares of GATX have gained 12.2% in a year. The Zacks Consensus Estimate for GATX’s 2022 earnings has been revised 5.9% upward in the past 60 days.


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Union Pacific Corporation (UNP) : Free Stock Analysis Report
 
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GATX Corporation (GATX) : Free Stock Analysis Report
 
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