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Here's Why You Should Retain Union Pacific Stock for Now
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Union Pacific’s (UNP - Free Report) efforts to enhance operational efficiency driven by an improved tech environment are commendable. The labor-friendly approach bodes well for the company. However, the freight market downturn is adversely impacting UNP’s prospects.
Factors Favoring UNP
Core pricing gains, enhanced operational efficiency and the sale of intermodal equipment are boosting Union Pacific’s financial performance.
The company's labor-friendly initiatives are encouraging, offering top-notch benefits that rank among the best in the industry. United Pacific encourages employee ownership through a program that matches 40% of contributions up to $15,000, resulting in more than 40% of the workforce owning shares. This sense of ownership bodes well.
UNP is fostering a tech-savvy culture by leveraging cutting-edge technology to enhance safety and efficiency. With more than 7,000 wayside detectors generating 16 million data points daily, the company proactively identifies risks, while its engineering team inspects 4.5 million miles of track each year using autonomous equipment to cover an additional 500,000 miles. These innovations have resulted in a 28% reduction in track-related derailments over the past decade.
United Pacific is enhancing train safety with the Physics Train Builder and aims to equip its entire fleet with intelligent cruise control by 2026, driving efficiency across its terminals and mainline tracks in 23 states.
The company's commitment to sustainability and innovation is commendable. UNP is set to test a first-of-its-kind hybrid battery-electric locomotive designed to reduce fuel consumption by up to 80%. These advancements contribute to improving the operational efficiency of UNP.
Shares of Union Pacific have rallied 20.5% in the past year compared with its industry’s growth of 17.4% in the same period.
Image Source: Zacks Investment Research
UNP: Key Risks to Watch
The freight market downturn, coupled with the normalization of e-commerce sales and a softening consumer market, presents challenges for Union Pacific. Geopolitical uncertainties and high inflation are dampening consumer sentiment, while reduced fuel surcharge revenues complicate the situation.
Union Pacific experienced a 1% decline in volumes year over year in 2023. With the ongoing softness in the freight market, the company may continue to encounter revenue challenges in the near term.
UNP’s Zacks Rank
United Pacific currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks for investors’ consideration in the Zacks Transportation sector include C.H. Robinson Worldwide (CHRW - Free Report) and Westinghouse Air Brake Technologies (WAB - Free Report) .
The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average surprise of 7.3%. Shares of CHRW have risen 26.5% in the past year.
WAB carries a Zacks Rank #2 (Buy) at present and has an expected earnings growth rate of 26% for the current year.
The company has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missing once. The average beat is 11.8%. Shares of WAB have climbed 73.2% in the past year.
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Here's Why You Should Retain Union Pacific Stock for Now
Union Pacific’s (UNP - Free Report) efforts to enhance operational efficiency driven by an improved tech environment are commendable. The labor-friendly approach bodes well for the company. However, the freight market downturn is adversely impacting UNP’s prospects.
Factors Favoring UNP
Core pricing gains, enhanced operational efficiency and the sale of intermodal equipment are boosting Union Pacific’s financial performance.
The company's labor-friendly initiatives are encouraging, offering top-notch benefits that rank among the best in the industry. United Pacific encourages employee ownership through a program that matches 40% of contributions up to $15,000, resulting in more than 40% of the workforce owning shares. This sense of ownership bodes well.
UNP is fostering a tech-savvy culture by leveraging cutting-edge technology to enhance safety and efficiency. With more than 7,000 wayside detectors generating 16 million data points daily, the company proactively identifies risks, while its engineering team inspects 4.5 million miles of track each year using autonomous equipment to cover an additional 500,000 miles. These innovations have resulted in a 28% reduction in track-related derailments over the past decade.
United Pacific is enhancing train safety with the Physics Train Builder and aims to equip its entire fleet with intelligent cruise control by 2026, driving efficiency across its terminals and mainline tracks in 23 states.
The company's commitment to sustainability and innovation is commendable. UNP is set to test a first-of-its-kind hybrid battery-electric locomotive designed to reduce fuel consumption by up to 80%. These advancements contribute to improving the operational efficiency of UNP.
Shares of Union Pacific have rallied 20.5% in the past year compared with its industry’s growth of 17.4% in the same period.
Image Source: Zacks Investment Research
UNP: Key Risks to Watch
The freight market downturn, coupled with the normalization of e-commerce sales and a softening consumer market, presents challenges for Union Pacific. Geopolitical uncertainties and high inflation are dampening consumer sentiment, while reduced fuel surcharge revenues complicate the situation.
Union Pacific experienced a 1% decline in volumes year over year in 2023. With the ongoing softness in the freight market, the company may continue to encounter revenue challenges in the near term.
UNP’s Zacks Rank
United Pacific currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks for investors’ consideration in the Zacks Transportation sector include C.H. Robinson Worldwide (CHRW - Free Report) and Westinghouse Air Brake Technologies (WAB - Free Report) .
C.H. Robinson Worldwide currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. CHRW has an expected earnings growth rate of 25.2% for the current year.
The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average surprise of 7.3%. Shares of CHRW have risen 26.5% in the past year.
WAB carries a Zacks Rank #2 (Buy) at present and has an expected earnings growth rate of 26% for the current year.
The company has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missing once. The average beat is 11.8%. Shares of WAB have climbed 73.2% in the past year.