Here's Why Union Pacific (UNP) Stock is Down Today

Union Pacific (UNP) shares are declining as the railroad operator is shutting down its locomotive repair facility next February 14 in Denver due to a slump in coal demand.
By U-Jin Lee ,

NEW YORK (TheStreet) -- Union Pacific Corp. (UNP) - Get Report  shares are declining 0.54% to $86.64 on Thursday as the railroad operator is shutting down its locomotive repair facility on February 14 in Denver due to a slump in coal demand.

Around 210 jobs will be moved somewhere else or the workers can choose to accept a severance package, the Associated Press reports.

The company said that since 2005, the amount of coal trains originating in Colorado has dropped 80%. 

"The well-documented decline in the coal carloadings in Colorado - a result of natural gas prices and regulatory pressure - has diminished the need for locomotive repairs and overhauls in the Denver area," Union Pacific spokesperson Calli Hite stated.

However, workers may have difficulty in finding jobs since the facility that's set to close is the largest railroad maintenance facility in Colorado, the AP added.

Separately, TheStreet Ratings team rates UNION PACIFIC CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

We rate UNION PACIFIC CORP (UNP) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its notable return on equity, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Road & Rail industry and the overall market, UNION PACIFIC CORP's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • 48.81% is the gross profit margin for UNION PACIFIC CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 23.37% is above that of the industry average.
  • The debt-to-equity ratio is somewhat low, currently at 0.65, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.74 is somewhat weak and could be cause for future problems.
  • UNION PACIFIC CORP' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, UNION PACIFIC CORP increased its bottom line by earning $5.76 versus $4.72 in the prior year. For the next year, the market is expecting a contraction of 1.9% in earnings ($5.65 versus $5.76).
  • You can view the full analysis from the report here: UNP
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