UNP – Markets expectations are for Uniform ROA to expand to record highs, but management may have concerns about efficiency, supply chain, and margins
Union Pacific Corporation (UNP) currently trades above historical and near corporate averages relative to Uniform earnings, with a 24.5x Uniform P/E (Fwd. V/E’).
At these levels, markets are pricing in expectations for Uniform ROA to expand to record highs, accompanied by 3% Uniform asset growth. .
Meanwhile, analysts expect Uniform ROA to improve to 13% by 2022, accompanied by 1% Uniform asset shrinkage.
If sustained going forward, these levels would imply a stock price closer to $177, representing approximately 26% equity downside for the firm.
Moreover, the firm’s most recent earnings call suggests management may have concerns about efficiency, supply chain, and margins.