UNP – Market expectations are for record-high Uniform ROA, but management may have concerns about growth opportunities, industry mergers, and their API platform

• Union Pacific Corporation (UNP:USA) currently trades above historical averages relative to UAFRS-based (Uniform) earnings, with a 25.4x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about growth opportunity execution, industry mergers, and their API platform

• Specifically, management may lack confidence in their ability to grow faster than the economy, execute on their growth opportunities, and meet their 2021 safety goals. Additionally, they may have concerns about the impact of the Kansas City Southern and Canadian Pacific merger as well as the regulatory hurdles of M&A opportunities. Furthermore, management may lack confidence in their ability to sustain business wins with their API platform, generate a positive yield, and work with Ferromex (FXE) or Kansas City Southern de Mexico (KCSM) to convert truck traffic to rail