Value
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.5 |
| P/S | 5.7 |
| EV/EBITDA | 2.5 |
| Fwd P/E | 6.3 |
| PEG | 3.5 |
| Analyst target | 4.0 |
- ▸Forward P/E: 20.5x
- ▸PEG: 3.39
UNP · Why this verdict
Why Union Pacific (UNP) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.4/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Union Pacific generates 41% return on equity and 29% operating margins — the highest in its railroad peer group — and ranks at the top on both quality and margins with peer quality rank of 8.75 out of 10, reflecting a highly efficient freight railroad operation. Peer-rank breakdown | ROE stays above 35% and operating margins remain above 25% for the next 4 reported quarters, sustaining the best-in-class competitive position | →Stable |
| CounterFree cash flow represents only 56% of net income, flagged as an earnings quality warning, and the PEG of 3.26 means investors are paying a steep premium for the quality — leaving limited room for disappointment | ||
Union Pacific has beaten earnings estimates in 3 of the last 4 quarters with an average positive surprise of 2.3%, demonstrating steady and reliable execution against analyst expectations — appropriate for a large-cap infrastructure railroad business. Earnings | Earnings beats continue in at least 2 of the next 4 quarters and the average positive surprise stays above 2% | →Stable |
| CounterThe one miss in the last four quarters was only -0.35%, suggesting the beat/miss pattern is very narrow and highly sensitive to small changes in volume, pricing, or fuel costs | ||
Union Pacific at $267.32 is within 2% of the resistance take-profit level of $272.69, with an asymmetry ratio of -0.34 and negative upside, meaning there is no favorable risk-reward entry at current prices despite the strong underlying business quality. Targets | Price corrects below $253, more than 5% below the current $267.32, restoring positive upside to analyst targets and an asymmetry ratio above 1.5 | →Stable |
| CounterThe stock is trading above its 200-day moving average with volume accumulation, and strong quality fundamentals can support a price that appears to have limited near-term upside in a range-bound setup | ||
A PEG ratio of 3.26 and forward P/E of 19.5x indicate the stock is trading at a significant premium to its growth rate, meaning the market has already priced in the quality advantage and sustained earnings delivery is required just to maintain the current valuation. Valuation breakdown | PEG ratio falls below 2.5 within 12 months through either earnings growth acceleration or a price correction that expands forward-looking value | →Stable |
| CounterBest-in-class quality businesses in infrastructure sectors routinely command PEG premiums above 3.0x because of the scarcity of high-quality, durable railroad assets — the premium may be structurally justified | ||
Union Pacific generates 41% return on equity and 29% operating margins — the highest in its railroad peer group — and ranks at the top on both quality and margins with peer quality rank of 8.75 out of 10, reflecting a highly efficient freight railroad operation.
→StablePeer-rank breakdown
- Expectation
- ROE stays above 35% and operating margins remain above 25% for the next 4 reported quarters, sustaining the best-in-class competitive position
CounterFree cash flow represents only 56% of net income, flagged as an earnings quality warning, and the PEG of 3.26 means investors are paying a steep premium for the quality — leaving limited room for disappointment
Union Pacific has beaten earnings estimates in 3 of the last 4 quarters with an average positive surprise of 2.3%, demonstrating steady and reliable execution against analyst expectations — appropriate for a large-cap infrastructure railroad business.
→StableEarnings
- Expectation
- Earnings beats continue in at least 2 of the next 4 quarters and the average positive surprise stays above 2%
CounterThe one miss in the last four quarters was only -0.35%, suggesting the beat/miss pattern is very narrow and highly sensitive to small changes in volume, pricing, or fuel costs
Union Pacific at $267.32 is within 2% of the resistance take-profit level of $272.69, with an asymmetry ratio of -0.34 and negative upside, meaning there is no favorable risk-reward entry at current prices despite the strong underlying business quality.
→StableTargets
- Expectation
- Price corrects below $253, more than 5% below the current $267.32, restoring positive upside to analyst targets and an asymmetry ratio above 1.5
CounterThe stock is trading above its 200-day moving average with volume accumulation, and strong quality fundamentals can support a price that appears to have limited near-term upside in a range-bound setup
A PEG ratio of 3.26 and forward P/E of 19.5x indicate the stock is trading at a significant premium to its growth rate, meaning the market has already priced in the quality advantage and sustained earnings delivery is required just to maintain the current valuation.
→StableValuation breakdown
- Expectation
- PEG ratio falls below 2.5 within 12 months through either earnings growth acceleration or a price correction that expands forward-looking value
CounterBest-in-class quality businesses in infrastructure sectors routinely command PEG premiums above 3.0x because of the scarcity of high-quality, durable railroad assets — the premium may be structurally justified
TrendMatrix Research · core thesis
Engine thesis — one sentence
Union Pacific delivers 41% ROE, 29% operating margins, and ranks best-in-class on both return and margin metrics within the railroad peer group, with a 3-out-of-4 earnings beat streak, but trades near analyst resistance with negative asymmetry and a PEG of 3.26 suggesting the quality is already fully priced in.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 6.1 |
| Gross margin | 7.3 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 3.7 |
| FCF quality | 4.4 |
| Moat | 6.4 |
| Piotroski F | 7.8 |
- ▸Excellent ROE: 41%
- ▸Strong margins: 29%
- ▸Earnings quality warning: 56% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
3.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.3 |
| EPS growth | 3.2 |
Momentum
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 2.2 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.0 |
| Analyst rating | 7.5 |
| Price target | 5.6 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Insider selling (low materiality) — $8,781,595 (0.005% of mkt cap)
Peer rank
5.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.8 |
| quality rank | 8.9 |
| growth rank | 6.7 |
- ▸Superior ROE vs peers
- ▸Best-in-class margins
Technical
3.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 0.2 |
| 52w position | 10.0 |
Risk (lower is worse)
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.2 |
| days to cover | 0.5 |
| volatility | 6.9 |
| put call | 5.8 |
| implied vol | 6.1 |
| beta | 7.2 |
| debt equity | 3.8 |
Catalyst
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 3.6 |
| dividend safety | 4.8 |
| news activity | 8.0 |
- ▸Strong earnings: 3B/1M
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:7.2>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:20d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.7=NEGATIVE
Warning (0)
none
Reward-to-Risk
-0.68
Upside
-6.6%
Downside
9.6%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 64, MACD bullish
EdgeCatalyst-Driven — Earnings in 20d with 3/4 beat streak
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 4.4 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Quality at 7.3) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.7=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.68 — supplementary context, not the trigger for this path.
The strongest dimensions are Quality at 7.3, Momentum at 7.2, and Sentiment at 6.1; the weakest are Growth at 3.2, Technical at 3.4, and Value at 4.6. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of -0.68 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Best In Class Roe And Margins
Trip ifOperating margin falls below 22% or ROE drops below 30% for 2 consecutive quarters
- P2Earnings Beat Streak Consistency
Trip ifEPS surprise falls below -5% in at least 3 of the next 4 quarters, ending the beat pattern
- P3Price At Resistance Negative Asymmetry
Trip ifPrice rises above $275, more than 2% above the current $267.32, further exceeding resistance without analyst target revision
- P4Rich Valuation Peg Above Three
Trip ifPEG ratio rises above 4.0 without a corresponding increase in earnings growth rate