Trim to 50–75% of model weight at $282–$290 resistance; hard stop at $260 on residual core
Underweight rating reflects convergence of three risk analysts on measured trim to 50–75% of model weight (not full exit or passive hold) given: (1) five stacked technical deterioration signals including price below 50 SMA/10 EMA/VWMA simultaneously, MACD histogram at −1.95 and expanding, RSI sub-30, and anemic Sep-23 volume (1.89M vs 2.6–3M run-rate); (2) 22.3x P/E at 90th percentile with 96% no-Fed-cuts regime capping multiple expansion; (3) 2.77 trailing PEG with telegraphed Q3/Q4 margin compression from fuel surcharge lag; (4) fragile 7.4 sentiment score resting on single UBS upgrade source. The 200 SMA structural floor at $260 (5.6% below current $275) and merger optionality ($6–12/share) bind against full exit, while the 9/18 lesson requiring active trim toward trigger levels in setups with 3+ independent deterioration signals and 4–6 week catalyst window prevents passive Hold designation. Execute trim into $282–$290 rallies; maintain hard $260 daily-close stop on residual.
| Position | Action |
|---|---|
| Trim 25–40% of existing position into first resistance retest at $282–$290 | Sell into 10 EMA ($282), VWMA ($282), and 50 SMA ($293) confluence zone |
| Residual core position after trim | Maintain 25–50% of model weight to participate in institutional re-rating or 200 SMA test |
| Do NOT initiate new long positions at $275 | Await reload zone at $261–$267 or confirmed trend repair at $282 |
| Full exit if daily close below $260 (200 SMA) on elevated volume | Structural thesis invalidated; full position termination |
| Weekly close below $256 | Confirm regime change; exit residual entirely |
UNP at $275.53 is a high-conviction BUY backed by oversold technicals, premium fundamentals, UBS's above-consensus $339 PT, and uncapped merger optionality, offering +13.3% expected return with downside protected by the 200 SMA.
| Indicator | Value | Signal |
|---|---|---|
| 10 EMA | 280.94 | bearish |
| 50 SMA | 293.04 | bearish |
| 200 SMA | 261.02 | neutral |
| RSI(14) | 34.96 | bearish |
| Bollinger Middle (20 SMA) | 289.49 | bearish |
| Bollinger Upper | 311.70 | neutral |
| Bollinger Lower | 267.28 | bullish |
| MACD | -5.10 | bearish |
| MACD Signal | -3.15 | bearish |
| MACD Histogram | -1.95 | bearish |
| ATR(14) | 6.02 |
This report is AI-generated for informational and educational purposes only and is not investment advice or a recommendation to buy or sell any security. Full disclaimer.
UNP's premium valuation is justified by best-in-class quality metrics
EV: +13.3% · concedes: Diesel at $6.31 national ($8 in California) creates near-term operating ratio pressure in Q3; The 20% bear case probability with $255-$265 target represents -4% to -8% downside; Coal remains a secular revenue drag, though declining as percentage of mix; Waiting for $261 200 SMA re-entry is a valid but potentially missed opportunity
UNP is in a confirmed short-term downtrend with no reversal confirmation, entering a binary Q3 earnings catalyst at a premium multiple (22.3x P/E, 90th percentile of own history) in a higher-for-longer rate regime. The cleaner entry is $261 (200 SMA), just $14.50 below current levels.
EV: +5.95% (over 3–6 months, audited probability framework; vs. bull's claimed +13.3%) · concedes: UNP's fundamental metrics are genuinely best-in-class: 39.7% ROE, 40.98% operating margin, 22.4% FCF margin are real; Diesel-driven modal shift from truck to rail is a real structural phenomenon; UNP generates strong FCF ($5.5B); Merger creates some upside optionality, even if timing is delayed and concessions likely; 200 SMA is sloping upward, meaning eventual re-entry level will be higher than $261 today; Existing longs can hold through noise and trim on rallies to $282–$290
→ vs conservative: Conservative 'trim to model weight' is insufficient; technicals warrant underweight given 50 SMA regime change from 308 to 293, MACD at negative 1.95, and anemic September 23 bounce on lighter volume
→ vs neutral: Neutral HOLD at 261 support ignores that paying 275 to wait for 261 is worse than having 261 with a tighter stop; trader plan identifies actionable R/R only in 261-267 zone
| neutral |
| VWMA | 282.13 | bearish |
Support: 261.02 · 267.28 · 268.26 | Resistance: 280.92 · 282.48 · 289.49 · 293.04 · 300 · 309
UNP technical analysis shows a confirmed short-term downtrend with price at 275.53 breaking below key moving averages (10 EMA 280.94, 50 SMA 293.04) and the VWMA at 282.13, indicating distribution-style behavior. The RSI at 34.96 approaches oversold territory while the MACD histogram remains negatively expanding at -1.95, showing momentum getting more bearish rather than stabilizing. The 200-day SMA at 261.02 remains the critical long-term bull/bear line, with price still +5.6% above this level, preserving the longer-term uptrend structure from the September 2025 floor near 210.
Market Cap
$163.69B
P/E (TTM)
22.31x
Forward P/E
19.44x
PEG Ratio
2.72
Price/Book
8.42x
Book Value per Share
$32.71
Dividend Yield
2.07%
Beta
0.97
Operating Margin
40.98%
Net Profit Margin
28.85%
ROE
39.70%
ROA
9.27%
FCF (TTM)
$4.72B
FCF Margin
22.4%
Revenue CAGR
~0.8%
Net Income CAGR
~5.8%
EPS Growth
~14.6%
Total Assets
$69.70B
Total Debt
$32.82B
Net Debt
$30.55B
Net Debt/EBITDA
~2.4x
Stockholders' Equity
$18.47B
Net PPE
$60.68B
Current Ratio
0.91
Total Revenue (FY2025)
$24,510M
Gross Profit (FY2025)
$11,220M
Operating Income (FY2025)
$9,846M
EBITDA (FY2025)
$12,940M
Net Income (FY2025)
$7,138M
Diluted EPS (FY2025)
$11.98
Operating Cash Flow (FY2025)
$9.29B
CapEx (FY2025)
$3.79B
Free Cash Flow (FY2025)
$5.50B
Dividends Paid (FY2025)
$3.24B
Buybacks (FY2025)
$2.68B
52-Week High
$315.99
52-Week Low
$215.53
50-Day MA
$293.95
200-Day MA
$263.25
Diluted Shares Outstanding
~596M
Debt/Equity
150.77%
Implied Price (P/E x EPS)
~$275.50
Forward EPS
$14.18
TTM EPS
$12.35
Target Entry Price
~$250-$260
Strengths
Concerns
Union Pacific is a best-in-class railroad operator trading at a premium 22.3x P/E with an elite 40.98% operating margin and 39.7% ROE, generating $5.5B in annual free cash flow from its irreplaceable 32,300+ mile rail network. Despite flat revenues, the company has achieved ~14.6% EPS growth through operational efficiency and aggressive share buybacks ($2.68B in FY2025), returning ~4.3% combined dividend and buyback yield to shareholders. The report rates UNP a HOLD given the premium valuation near 52-week highs, recommending a wait-for-pullback strategy targeting ~$250-$260 for new entrants.
Macro: The macro backdrop is mixed for Union Pacific. Polymarket pricing shows a 96% probability of zero Fed rate cuts in 2026 (with $8.5M volume), indicating a higher-for-longer regime that is mildly constructive for cyclical industrials but caps multiple expansion. Oil remains elevated above $105/bbl, with diesel clearing $6.31 nationally (up to $8 in California) — net negative on operating ratio math near-term but positive for truck-to-rail substitution share over 2-4 quarters. Gold settling lower as USD and yields rise is consistent with the hawkish Fed view. Risk-on pockets persist (Bitcoin pushing >$86K), suggesting capital rotation rather than capitulation, with industrials historically lagging these moves. FRED macro data was unavailable in this session. Railroad-specific prediction markets showed no open markets on rail freight or recession 2026, leaving crowd-priced merger approval odds unavailable.