Union Pacific Stock (NYSE: UNP) is expected to report its Q2 2024 results on Thursday, July 25, with revenues projected to come in at $6.10 billion and earnings of $2.73. While higher costs may impact the operating ratio, the stock has seen a 15% rise in 2021, moving from $210 to around $240 now. However, it has underperformed the S&P 500, with returns of 21% in 2021, -18% in 2022, and 2% in 2023. The Trefis High Quality (HQ) Portfolio has outperformed the S&P 500 consistently, with better returns and less risk.
In the current uncertain macroeconomic environment with high oil prices and elevated interest rates, there is speculation on whether UNP will underperform or see a strong jump. With a valuation of $254 per share based on a 22x P/E multiple and expected earnings of $11.31 per share for 2024, there seems to be little room for growth from the current level of $240. In the previous quarter, Union Pacific saw a decline in revenues due to lower volumes, but a rise in EPS thanks to an improvement in the operating ratio, with coal freight being negatively impacted.
In the latest quarter, Union Pacific is expected to have experienced an improvement in overall volumes, while coal demand may continue to be weak due to lower natural gas prices. The company’s focus on improving its operating ratio through productivity initiatives is expected to bolster bottom-line growth. Despite navigating well in Q2, the stock may have limited room for growth unless the company posts an upbeat quarter and raises its full-year outlook.
While UNP stock may seem to have limited growth potential, it is important to compare Union Pacific’s performance with that of its peers. Looking at how the company’s peers fare on important metrics can provide valuable insight. Investors can also explore other comparisons for companies across industries to make informed investment decisions. With Trefis Market-Beating Portfolios and Price Estimates, investors can access tools and information to help them invest wisely and stay ahead in the market.
