Union Pacific Corporation UNP issued a regulatory filing ahead of its investor day event on Sept. 19. In the filing, management stated that the company expects its revenues (excluding those from fuel surcharge) to grow faster than volumes (excluding coal) in the next three years, outpacing the markets served by the railroad operator. UNP expects to maintain an industry-leading operating ratio (operating expenses as a % of revenues) in the next three years with the help of high revenues. We should note that a lower value for the metric is favored.
UNP expects an earnings per share compound annual growth rate (EPS CAGR) in the high single-low double-digit band. Capital expenditure (on an annual basis) is expected to be in the $3.5-$3.7 billion range in the next three years. The company, apart from maintaining a strong investment-grade credit rating, expects to maintain an industry-leading return on invested capital.
Displaying its shareholder-friendly attitude, UNP expects to repurchase shares worth $4-$5 billion annually in three years (2025 onward). UNP anticipates increasing annual dividend payments consistent with a dividend payout ratio target of 45% of earnings.
Price Performance of UNP
UNP’s shares have risen 17.5% in a year, outperforming its industry’s 14.7% growth in the same timeframe.
Image Source: Zacks Investment Research
The bullish outlook issued by the company is a further positive.
Union Pacific’s Zacks Rank
UNP 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 and Westinghouse Air Brake Technologies WAB.
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 18.3% in the past year.
WAB, too, flaunts a Zacks Rank #1 at present andhas 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 (missing the mark once). The average beat is 11.8%. Shares of WAB have climbed 66.4% in the past year.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Union Pacific Corporation (UNP) : Free Stock Analysis Report
C.H. Robinson Worldwide, Inc. (CHRW) : Free Stock Analysis Report
Westinghouse Air Brake Technologies Corporation (WAB) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
