Union Pacific Corporation (UNP): investment thesis checklist
What a value investor writing down why they own Union Pacific Corporation would be relying on, read from its filings: the figures that have carried the business, the lines a reader might set on them, and the published tests it meets today. A list to write against, not a view on the company.
1. The figures the case would rest on
- Return on invested capital: 15.3% in FY2025; between 13.6% and 16.6% over 7 filed years, median 15.3%. Does the thesis need it to stay inside that range?
- Return on equity: 38.6% in FY2025; between 21.2% and 57.5% over 10 filed years, median 39.3%. Does the thesis need it to stay inside that range?
- Free cash flow yield: 4.0% in FY2025; between 3.2% and 5.0% over 10 filed years, median 4.0%. Does the thesis need it to stay inside that range?
- EV to EBIT: 17.22x in FY2025; between 16.44x and 21.50x over 7 filed years, median 18.08x. Does the thesis need it to stay inside that range?
- Price to earnings: 19.31x in FY2025; between 10.04x and 26.42x over 10 filed years, median 20.50x. Does the thesis need it to stay inside that range?
- Operating margin: 40.2% in FY2025; between 36.3% and 42.8% over 10 filed years, median 39.6%. Does the thesis need it to stay inside that range?
- Net debt to EBITDA: 2.57x in FY2025; between 2.51x and 2.92x over 7 filed years, median 2.65x. Does the thesis need it to stay inside that range?
- Revenue growth, 5-year CAGR: 4.6% in FY2025; between -2.2% and 4.6% over 10 filed years, median 0.9%. Does the thesis need it to stay inside that range?
- Share count change: -2.1% in FY2025; between -6.4% and -0.3% over 10 filed years, median -3.9%. Does the thesis need it to stay inside that range?
2. What must stay true: guardrails a reader might set
Each line is drafted from Union Pacific Corporation's own current figure, never from a level we think a business should clear, and replayed over its filed years. They are a reader's to keep, edit or drop.
Debt to Equity stays at or below 2.23x
Today 1.78x. Replayed over 7 filed years, it would have broken in 2; most recently FY2023, at 2.32x (10-K, filed 2024-02-09).
Return on Invested Capital stays at or above 12.2%
Today 15.3%. This indicator depends on inputs (market price, multi-statement composites) whose history is not deep enough to re-derive it with the same formula as the live value, so no honest retro-test exists for it.
Dividend Rate stays at or above $5.62
Today $5.68. This indicator depends on inputs (market price, multi-statement composites) whose history is not deep enough to re-derive it with the same formula as the live value, so no honest retro-test exists for it.
3. What would break it
- A filed year in which debt to equity rose above 2.23x.
- A filed year in which return on invested capital fell below 12.2%.
- A filed year in which dividend rate fell below $5.62.
4. The published tests it meets today
Of 30 tests value investors published: 2 met, 28 not met, 0 we could not complete. Counts, never a score.
Meets: ROIC at or above WACC; Cash-covered dividend.
What this cannot tell you
What the numbers say today, not the day one stops being true. The reasons are not written down.
An account adds
One email the night a number you wrote down breaks. Silence otherwise.
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How this is computedA computation on accounts filed with the SEC, not a recommendation and not advice. Past filings do not indicate future results. Risk disclaimer.