Union Pacific Corp Stock Buy Recommendation Reiterated (UNP)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Union Pacific (NYSE: UNP) has been reiterated by TheStreet Ratings as a buy with a ratings score of A+ . The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

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Highlights from the ratings report include:
  • UNP's revenue growth has slightly outpaced the industry average of 1.2%. Since the same quarter one year prior, revenues slightly increased by 2.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.45, is low and is below the industry average, implying that there has been successful management of debt levels.
  • 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. Compared to other companies in the Road & Rail industry and the overall market, UNION PACIFIC CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • 41.50% 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 19.73% is above that of the industry average.
  • Net operating cash flow has increased to $1,795.00 million or 16.63% when compared to the same quarter last year. In addition, UNION PACIFIC CORP has also modestly surpassed the industry average cash flow growth rate of 13.52%.

Union Pacific Corporation, through its subsidiary, Union Pacific Railroad Company, provides rail transportation services in North America. Union Pacific has a market cap of $61.84 billion and is part of the services sector and transportation industry. The company has a P/E ratio of 15.9, below the S&P 500 P/E ratio of 17.7. Shares are up 4.6% year to date as of the close of trading on Friday.

You can view the full Union Pacific Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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