QS Research · Michael Burry's Scion Capital analyst template · 2006
UNION PACIFIC CORP (UNP)
As of 2026-11-06 · 11/15 boxes filled from SEC filings and market data
Conclusion: PASS
Conviction medium · base case -1% · downside -20% · upside +14%
UNP is a high-quality rail franchise, but at $290.16 it already trades at the given 22.6x TTM P/E and 15.4x TTM EV/EBITDA on TTM EBITDA of $13.10B, and the TTM base value at that multiple is roughly $288 (-1%). The downside at 12.8x peer-floor EBITDA is about $231 (-20%) and the upside at CP's 17.3x is about $330 (+14%), so reward/risk is roughly 1:1 and the midpoint of the methods sits at today's price. This is a secular-mode TTM valuation, not a cycle-average call: it uses TTM revenue $26.36B, EBIT $10.56B and net income $7.62B, with no normalization uplift. The Norfolk Southern merger and fuel-driven operating-ratio noise are real catalysts, but neither creates a margin of safety at this price; pass.
Key numbers
- Share price: $290.16
- Market cap: $172.43B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $26.36B
- EV / EBITDA (TTM): 15.4x
- P/E (TTM): 22.6x
- Price / book: 7.83x
The 15 boxes
- ✓ 1. Long-form business notes
Union Pacific is a single-segment Class I railroad: 32,889 route miles in the western two-thirds of the U.S., $23.2 billion of freight revenue in 2025 split Bulk 33% / Industrial 37% / Premium 30%, moving freight for roughly 10,000 customers (FY2020 count) with 83% of the workforce under 13 rail union contracts. Across the six years to FY2025 revenue rose from $19.53B to $24.51B and operating income from $7.83B to $9.85B, while operating cash flow stayed in a $8.38B-$9.36B band and capex rose to $3.79B in FY2025. The strategy language in the filings shifted from the FY2020 'G55+0'/PSR-conversion framing to a FY2025 'Safety, Service, Operational Excellence leading to Growth' framing aimed at an industry-leading operating ratio and return on invested capital. The network itself grew modestly (route miles, automotive distribution centres and assembly plants served), and a pending acquisition of Norfolk Southern is disclosed but not quantified here.
- ○ 2. Competitive advantage
UNP shows a durable rail-scale advantage in the numbers: FY2025 revenue $24.51B, operating income $9.85B, about 40.2% operating margin, and $9.29B operating cash flow against $3.79B capex. But it is not a monopoly: BNSF runs parallel routes, trucks/barges/pipelines compete, and product/geographic substitution can constrain prices. Regulation (common-carrier duties, STB pricing oversight) and the need to maintain its own rail network limit the moat. The sources do not give brand, segment margins, market share, or customer switching-cost data.
- ✓ 3. 10-Q takeaways
Q3 2026 showed 15% total revenue growth to $7.197B and 15% freight revenue growth, with 6% carload growth, record fuel prices, and net income of $2.1B ($3.49/diluted share); the operating ratio was 59.1%. 9M 2026 operating cash flow was $8.302B and free cash flow $2.362B; the company paused buybacks for the pending Norfolk Southern deal and raised the quarterly dividend to $1.42. The 2026 capital plan is ~$3.5B, and S28 disclosed no new specific risk factors beyond referring to the FY2025 10-K.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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