Maintain 75-80% Underweight through Q3 catalyst; skip pre-committed trim, hard stop $260
Maintain 75-80% Underweight sizing through the Q3 binary catalyst window without further action—neither adding into unresolved $279-$290 overhead supply nor trimming to compound the 10/1 overcalibration. Hard stop $260 on residual. Re-engage only on confirmed breakout >$290 with MACD positive cross or successful $260-265 pullback test with positive divergence.
| Position | Action |
|---|---|
| Current position | Maintain 75-80% of model weight |
| Price at $278 | Do not add |
| Pre-committed 10/1 calendar-based pre-earnings trim | Skip execution to avoid compounding overcalibration |
| Residual position stop | $260 hard stop (200 SMA) |
Union Pacific is a high-quality industrial growth franchise undergoing a healthy technical reset, with accelerating fundamentals, an attractive forward PEG of 1.32, an insurmountable moat in U.S. freight rail, and a coiled spring technical setup pointing to significant upside from current levels.
| Indicator | Value | Signal |
|---|---|---|
| Price Close | 278.28 | bullish |
| Price Open | 273.72 | neutral |
| Price High | 278.54 | bullish |
| Price Low | 273.08 | neutral |
| Volume | 3,036,912 | bullish |
| 10 EMA | 275.75 | bullish |
| 50 SMA | 289.84 | bearish |
| 200 SMA | 262.68 | bullish |
| RSI (14) | 44.64 | neutral |
| MACD | -4.87 | bullish |
| MACD Signal | -4.97 | bullish |
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.
When: Successful $260-265 test with positive divergence and declining volume climax
Then: Consider adding
EV: +$315+ (52-week high retest by year-end) · concedes: Coal secular decline is real but manageable — shrinking portion of a growing, diversifying mix; Cyclical exposure exists but recession is priced at only 8% and the soft landing base case is positive for rail volumes; The 50 SMA rolling over and RSI below 50 are valid tactical concerns for short-term traders; Transitory cost pressures (diesel) are real but hedged and already absorbed in record margins
UNP is a high-quality industrial priced for perfection, sitting mid-range in a corrective pattern, with a neutral-to-hostile macro backdrop and no near-term catalyst. The path of least resistance is sideways-to-down, not up.
EV: -3.6% to -5.5% probability-weighted downside (implied) · concedes: UNP is not a short candidate; The moat is real (Class I railroads are oligopolies); Cash generation is genuine; Deleveraging is underway; Q3 2026 net income estimates at $1.79B-$2.00B could potentially be met or exceeded
→ vs conservative: Buyback collapse argument ($2.68B to $26M) is backwards — management deliberately deleveraging to build capacity for massive future capital return wave once leverage target is hit
→ vs conservative: Four years of flat revenue is stale data — Q2 2026 broke the pattern entirely with 11.5% YoY growth; 15% EPS growth on flat top line is exactly what a well-run oligopoly should do
→ vs conservative: Technical analysis of 50 SMA rollover and overhead supply ignores textbook shallow correction pattern with intact long-term uptrend; RSI deeply oversold, MACD crossed positive
→ vs conservative: Risk-reward of 1:1 is laughably conservative — true risk-reward is minimum 2:1 before factoring Fed pivot or Q3 earnings catalyst; bear case requires breaking the 200 SMA which has been a rising floor since August
→ vs conservative: Macro is being massively underweighted — falling yields, dovish Fed pivot, AI capex boom all support intermodal volumes; no real headwind just uncertainty that cuts both ways with upside bias
| MACD Histogram | +0.10 | bullish |
| Bollinger Middle Band (20 SMA) | 279.17 | neutral |
| Bollinger Upper Band | 291.29 | bearish |
| Bollinger Lower Band | 267.04 | bullish |
| ATR (14) | 5.03 | neutral |
| VWMA | 275.96 | bullish |
| Day's Range | 273.08 – 278.54 | neutral |
Support: 267.04 · 269.63 · 273.08 | Resistance: 278.54 · 279.17 · 283 · 289.84 · 291.29
UNP is at a technical inflection point with the long-term uptrend (200 SMA = 262.68) structurally intact but the intermediate trend (50 SMA = 289.84) rolled over and acting as overhead resistance. The September selloff from 314 to 269 has reset short-term momentum: RSI bounced from 24.6 to 44.6, MACD histogram flipped positive for the first time since the breakdown, and today's +2.15% rally pushed price above the 10 EMA and VWMA. ATR compression to 5.03 suggests an imminent directional expansion of 5–10%, with the cleanest tactical setup being a buy-on-dip strategy with stops below 267 and confirmation on a daily close above 279.17.
Market Cap
$165.32 B
P/E Ratio (TTM)
22.5x
Forward P/E
19.6x
PEG Ratio
2.7
Price / Book
8.51x
EPS (TTM)
$12.37
Forward EPS
$14.19
Dividend Yield
2.09%
Beta
0.97
52-Week Range
$215.53 – $315.99
Gross Margin
~56%
Operating Margin
41.0%
Net Profit Margin
28.8%
ROE
39.7%
ROA
9.27%
Q2 2026 Revenue
$6.86B
Q2 2026 Operating Income
$2.76B
Q2 2026 EBITDA
$3.51B
Q2 2026 Net Income
$1.99B
Q2 2026 Diluted EPS
$3.36
FY2025 Total Revenue
$24.51B
FY2025 Operating Income
$9.85B
FY2025 EBITDA
$12.94B
FY2025 Net Income
$7.14B
FY2025 Diluted EPS
$11.98
FY2025 Operating Margin
40.2%
Q2 2026 Total Assets
$71.21B
Q2 2026 Total Equity
$20.67B
Q2 2026 Total Debt
$31.17B
Q2 2026 Cash & Equivalents
$1.61B
Q2 2026 Net Debt
$28.71B
Q2 2026 Net PPE
$61.07B
Q2 2026 Current Ratio
0.99
Net Debt / EBITDA
2.2x
Q2 2026 Operating Cash Flow
$3.08B
Q2 2026 CapEx
$873M
Q2 2026 Free Cash Flow
$2.20B
FY2025 Operating Cash Flow
$9.29B
FY2025 CapEx
$3.79B
FY2025 Free Cash Flow
$5.50B
FY2025 Dividends Paid
$3.24B
FY2025 Buybacks
$2.68B
FY2025 Total Capital Returned
$5.92B
Cumulative Retained Earnings
$71.58B
Dividend Per Share (Annual Est.)
$5.52/year
FCF Yield
~2.9%
EV/EBITDA (est.)
~15x
TTM Revenue
$25.4B
EPS Growth 2023-2025
+14.6%
Equity Growth YoY
+27%
vs 200D MA
+5%
vs 50D MA
Below
Strengths
Concerns
Union Pacific Corporation is a high-quality, defensive industrial franchise with industry-leading margins (41% operating, 29% net), robust free cash flow ($5B+ annually), and a steadily improving balance sheet. The company delivered a record Q2 2026 with $6.86B revenue (+11.5% YoY) and $3.36 EPS, while actively deleveraging with net debt declining 10% YoY to $28.7B (2.2x EBITDA). However, the stock trades at a premium (22.5x P/E, 2.7 PEG), limiting margin of safety, with near-term momentum softened by trading below the 50-day MA ($291) but supported by an intermediate-term uptrend above the 200-day MA ($264).
Macro: The macro picture is mixed for UNP. Dovish Fed re-pricing from a softer September jobs report (lower 10Y yields reducing discount-rate drag on quality industrials) is bullish. However, markets price zero Fed cuts in 2026 (96% probability, $8.7M Polymarket volume) — a higher-for-longer regime that caps equity multiples. Recession odds are low at 8% ($2.24M Polymarket volume), supporting the soft-landing base case for rail volumes. Iran-conflict inflation creates a diesel cost headwind (UNP's largest variable cost) and could delay the Fed pivot. Bond market veteran Gundlach's 'hollow tree' warning flags reversal risk for cyclical industrials at elevated valuations. No company-specific news for UNP in the 1-week and 2-month lookback periods; the next catalyst window is Q3 2026 earnings (typically mid-to-late October).