UNP
Union Pacific Corp
Industrial/Transportation
12/14/2015
Presented
| Date | 12/09/2015 |
| Price | $77.54 |
| Market Cap | $67.13B |
| Ent Value | $88.79B |
| P/E Ratio | 13.39x |
| Book Value | $24.07 |
| Div Yield | 4.06% |
| Shares O/S | 865.80M |
| Ave Daily Vol | 5,559,619 |
| Short Int | 1.16% |
Current
| Price | $245.79 |
| Market Cap | $149.73B |
| Union Pacific Corp. provides railroad and freight transportation services. Its principal operating company, Union Pacific Railroad Co., operates as a railroad franchise, covering 23 states across the western two-thirds of the United States by rail, providing a critical link in the global supply chain. The Railroad's diversified business mix includes Agricultural Products, Automotive, Chemicals, Coal, Industrial Products and Intermodal. The Agricultural Products business engages in the transportation of grains, commodities produced from these grains, and food and beverage products. It also serves significant domestic markets, including grain processors, animal feeders and ethanol producers in the Midwest, West, South and Rocky Mountain states. The Automotive business engages in automotive carrier business in west of the Mississippi River and operates vehicle distribution centers. It serves vehicle assembly plants and connects to West Coast ports and the Gulf of Mexico to accommodate both import and export shipments. In addition to transporting finished vehicles, it provides expedited handling of automotive parts in both boxcars and intermodal containers destined for Mexico, the U.S. and Canada. The Chemicals business engages in transportation of chemicals. Its franchise serves the chemical producing areas along the Gulf Coast and also accesses chemical producers in the Rocky Mountains and on the West Coast. The company's chemical shipments include four broad categories: petrochemicals, fertilizer, soda ash, and other, which include sodium products, phosphorus rock and sulfur. The Coal business includes the shipments of coal and petroleum coke to independent and regulated power companies and industrial facilities throughout the U.S. Through interchange gateways and ports, its reach extends to eastern U.S. utilities, Mexico, Europe and Asia. The Industrial Products business facilitates the movement of numerous commodities throughout North America. The Industrial Products group consists of several categories, including construction products, minerals, consumer goods, metals, lumber, paper, and other miscellaneous products. The Intermodal business includes two segments: International and Domestic. The International segment consists of import and export container traffic that mainly passes through West Coast ports. The Domestic segment includes container and trailer traffic picked up and delivered within North America for intermodal marketing companies (primarily shipper agents and logistics companies), as well as truckload carriers. Union Pacific was founded in 1969 and is headquartered in Omaha, NE. |
Publicly traded companies mentioned herein: Canadian Pacific Railway Limited (CP), Norfolk Southern Corporation (NSC), Union Pacific Corporation (UNP)
Highlights
The presenter said he is short Union Pacific (UNP) because he believes the business is operating at a cyclical peak and the risk/ reward with shares hovering around $78 is favorable. He believes a more fair value for the stock is $56, representing a 25% return. Street earnings estimates for 2016 and 2017 appear to be too high given the many structural issues facing each of UNP’s main segments, and with rail volume declining (and accelerating to the downside in Q4 2015) the timing appears to be reasonable to place a bearish bet on the stock.
Cyclical Issues
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