UNP
Union Pacific Corporation
Industrials · Railroads · United States · Stock
Score Breakdown
Scored for Dividend Income profile
Sub-scores are 0–20 each; Model Score is weighted by your selected investment goal. How it works →
Why Ranked Here
- The profitability sub-score of 18.8/20 is the primary driver of the 58.6 score, reflecting Union Pacific's consistently high net and operating margins and strong return on assets as reported in the FY2025 10-K.
- The dividend sub-score of 13.8/20 adds meaningful score weight, supported by filing-derived evidence of sustained DPS growth, FCF coverage of dividends, and a disciplined FCF payout ratio.
- The momentum sub-score of 12.0/20 provides a modest positive contribution, suggesting some sequential quarterly improvement in revenue or earnings trends within the filing period, though not strong enough to indicate an accelerating business.
Why Not Higher
- The financial health sub-score of 10.0/20 materially constrains the overall score, as the 10-K data reflects a heavily leveraged balance sheet with limited interest coverage buffer — a structural feature of Union Pacific's capital allocation strategy that carries real financial risk.
- The growth sub-score of 10.0/20 and the theme sub-score of 0.0/20 together remove approximately 20 potential points from the model, reflecting a business that is not growing rapidly and has no alignment with the macro themes the model rewards.
Data Confidence
10 / 10
Very High — full data coverage
Research Summary
AI-generated analysis reflects data and conditions as of the report date shown above. Verify any specific figures through primary sources before acting on this analysis.
Union Pacific Corporation is one of the two largest freight railroad operators in the United States, running approximately 32,000 route miles across 23 western states. The company transports a broad mix of commodities including agricultural products, automotive goods, chemicals, coal, industrial materials, and intermodal freight, making it a critical artery of the U.S. supply chain. Its regulated, capital-intensive infrastructure creates significant barriers to entry and generates consistent, large-scale cash flows. The model assigned UNP a score of 58.6/100, reflecting a company with genuine strengths in profitability and dividend discipline but meaningful constraints in growth and financial health. The profitability sub-score of 18.8/20 is the standout result, indicating strong net margins, operating margins, and return on assets consistent with Union Pacific's pricing power and operational efficiency. The dividend sub-score of 13.8/20 reflects solid free cash flow coverage of dividend payments, a consistent dividend per share growth streak, and a manageable FCF payout ratio. However, the growth sub-score of 10.0/20 signals limited year-over-year expansion in revenue, net income, or EPS from the most recent filing period, and the financial health sub-score of 10.0/20 points to elevated leverage and constrained interest coverage — a common but notable feature of capital-heavy railroad balance sheets. The central research tradeoff for UNP is the tension between its exceptional profitability profile and its stretched balance sheet. The company's competitive moat and cash generation capability are well-supported by the filing data, but the leverage burden and subdued growth trajectory cap the overall model score. Researchers focused on dividend income will find the most alignment here, as the best-fit profile score of 64.6 under that goal reflects the company's FCF durability and income consistency, even as growth and speculative upside remain limited.
Plain English
Union Pacific is a massive freight railroad company that moves goods like grain, chemicals, and cars across the western United States on tracks it owns. The model score of 58.6 out of 100 means it grades well on profitability and dividends but gets held back by high debt and slow recent growth. The Medium risk rating reflects that this is a financially stable but heavily leveraged industrial business — not particularly volatile in operations, but not without balance sheet risk. It's flagged as 'Research Further' rather than a strong conviction pick, meaning researchers should dig deeper before forming a view.
Bull Case vs. Bear Case
Bull Case
- The profitability sub-score of 18.8/20 reflects best-in-class operating margins and return on assets derived from Union Pacific's irreplaceable rail network and disciplined Precision Scheduled Railroading operating model.
- The dividend sub-score of 13.8/20 confirms that free cash flow generation is sufficient to cover dividend payments with a manageable payout ratio, and DPS growth has been sustained over multiple consecutive years per the 10-K filing data.
- Union Pacific's geographic monopoly across 23 western U.S. states creates structural pricing power in key commodity corridors — agricultural exports, energy inputs, and intermodal — that underpins the profitability metrics observed in the filing.
Bear Case
- The growth sub-score of 10.0/20 indicates weak year-over-year improvement in revenue, net income, and EPS as derived from the FY2025 10-K, suggesting the company is not meaningfully expanding its top or bottom line in the current filing period.
- The financial health sub-score of 10.0/20 signals elevated leverage ratios and constrained interest coverage, meaning a significant portion of operating cash flow is directed toward debt servicing rather than reinvestment or shareholder returns.
- The theme sub-score of 0.0/20 indicates that Union Pacific has no measurable exposure to the macro growth themes tracked by the model, limiting its appeal to researchers seeking alignment with secular tailwinds such as electrification, AI infrastructure, or reshoring.
What Could Change the Picture
Bullish Triggers
- A meaningful improvement in the growth sub-score — driven by filing evidence of accelerating revenue and EPS growth in future 10-K reports — would indicate Union Pacific's volume and pricing environment is strengthening, which could lift the overall model score toward the mid-60s.
- A reduction in leverage ratios sufficient to raise the financial health sub-score above 14/20 would signal improved balance sheet durability and would meaningfully increase the model's confidence in sustained dividend coverage under stress conditions.
Bearish Triggers
- A deterioration in the profitability sub-score in a future filing — caused by margin compression from rising fuel costs, labor agreements, or volume mix shifts — would directly undermine the primary pillar supporting UNP's current model score.
- Evidence in a subsequent 10-K of reduced free cash flow coverage of dividends, resulting in a lower dividend sub-score, would weaken the primary investment thesis for researchers evaluating UNP under the dividend income goal profile.
Red Flags
- The financial health sub-score of 10.0/20 combined with a growth sub-score of 10.0/20 raises a concern that Union Pacific may be relying on debt-funded capital allocation rather than organic earnings expansion to sustain shareholder returns.
- The zero theme score indicates a complete absence of exposure to any of the macro themes tracked in the model, which could become a relative disadvantage if capital flows increasingly favor thematically aligned industrial operators.
Risk Profile
Medium RiskThe Medium risk rating reflects Union Pacific's combination of a highly profitable but capital-intensive and heavily leveraged operating structure — the business generates strong cash flows but carries significant debt obligations as documented in the 10-K, meaning adverse volume or rate environments could pressure interest coverage more quickly than the profitability metrics alone would suggest. This is not a high-risk speculative profile, but the balance sheet constraints introduce meaningful downside sensitivity.
Key Catalysts to Watch
The key factors to monitor for Union Pacific include trends in U.S. freight volumes across its core commodity corridors — particularly agricultural exports, intermodal, and industrial goods — as these directly drive the revenue and margin metrics that underpin the profitability sub-score. Researchers should also track capital allocation disclosures in future 10-K filings for evidence of debt reduction, as a sustained improvement in leverage ratios would be the most direct path to a higher financial health sub-score and a stronger overall model rating.
This report is for educational and research purposes only. It does not constitute financial, investment, legal, or tax advice — always conduct your own due diligence before making investment decisions.