Tuesday, May 12, 2015

Union Pacific Corporation: Keeping Your Portfolio on Track

As long as consumers continue to consume, Union Pacific (NYSE:UNP) will be there to ship goods across the country. Union Pacific Corporation is a dividend challenger with 8 consecutive years of dividend increases. Union Pacific closed trading on Friday, May 8th at $107.44 giving a current yield of 2.05%.

The following tables/graphs are taken from my personal stock analysis spreadsheet. Data for the stock analysis was sourced from Union Pacific Corporation's investor relations page, Morningstar, and Yahoo Finance.

Historic Growth Rates:

Historically, owners of Union Pacific have earned solid returns. According to longrundata.com, UNP has rewarded investors with a total return of 796% or 23.0% annualized returns over the last 10 years. Those numbers are market returns at specific snapshots in time and aren't necessarily indicative of the business results over the same time period. Looking at the historic growth rates for per share dividends, earnings, revenue, and free cash flow gives a better idea of the operational results that Union Pacific has delivered.

You can read the rest of the stock analysis of Union Pacific on Seeking Alpha.  Also you can check out the rest of my stock analysis reports here.

6 comments:

  1. Portfolio ON TRACK. I see what you did there!

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  2. We have a limit order in on Union Pacific for my wife's account. It hasn't been reached yet, but it seems like a solid place to invest......so long as the global economy doesn't go off the rails. Sorry buddy, I couldn't resist :)
    -Bryan

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    1. Bryan,

      I really like the railroads and believe they are a great place to invest for anyone with a long investment horizon. The potential threats that I see for the industry would be air shipment (not likely due to cost), water shipment (not likely due to feasibility), more localized manufacturing (doubtful due to loss of scale efficiencies), or land (trucking is a far cry from the efficiency standpoint over long distances).

      Around $100 would get me interested more but I probably wouldn't bite just then due to capital being tighter than normal. If it happened to dip into the mid $90's then I'll definitely be throwing some capital into UNP. Just curious, what's your limit order set at, give or take?

      Thanks for stopping by!

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  3. Agreed JC. Our current limit order is at $100.37. We put it on a couple weeks ago, when the share price was $106. We may need to reevaluate. My chief concern with the railroads is they have risen a lot over the last few years, and while they won't go broke in the next recession, their profitability will be severely hampered. With that in mind, the current P/E is high, but at least Union Pacific is a best of breed and has massive infrastructure to ship goods to/from Pacific ports.
    -Bryan

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    Replies
    1. Bryan,

      Well another day like today and it looks like you'll be an owner of UNP. I'm leaning more towards waiting on UNP because the economy still seems so fragile. The yield just isn't quite strong enough to take advantage of a bear market with reinvestment. Still love this company though because I don't see any realistic threats to their business model over the long term.

      Thanks for stopping by!

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