Morningstar Rating

Stock Research and Analysis

by Keith Schoonmaker, CFA

Bulls Say

UP's Western tracks afford access to attractive freight. UP hauls a cargo mix rich in commodities such as agriculture and containers ferrying imported goods from Asia.
Compared with trucking, shipping by rail is less expensive for long distances, is 4 times more fuel-efficient per ton-mile shipped, and generally has ample capacity.
Coal that UP hauls from the PRB is substantially cheaper (delivered price per million BTU) than coal from other regions. While we believe cheap natural gas will continue to reduce coal demand, PRB coal will be less affected than Appalachian. Read more 

Bears Say

Unlike trucking firms, railroads must build and maintain their roads. High required maintenance capital expenditures consume at least half of UP's capital expenditures.
Railroads face risk of reregulation on several fronts, including safety bills and Surface Transportation Board-permissible rate calculations.
UP's large automotive franchise contributed 10% of 2013 freight revenue. This high exposure was a liability when the firm's auto volume dropped 19% during 2008, then an astonishing 30% in 2009. Read more 


Overall, we consider Union Pacific's stewardship to be solid, and we have no material criticism of its governance or use of shareholder resources.
UP's board elected Lance Fritz, 52, president and CEO in February; he also joined the board of directors.  Read more 


Omaha, Nebraska-based Union Pacific is the largest public railroad in North America. Operating on 32,000 miles of track in the western two thirds of the U.S., UP's 43,000   Read more 

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