UNP Financial Analysis

Analysis Date: 1/24/2025

Business Model

Union Pacific generates revenue primarily through freight transportation services across its rail network

Revenue Sources

• Bulk freight (coal, grain, fertilizer) - $7.2B in 2024
• Industrial freight (chemicals, metals, forest products) - $8.4B in 2024
• Premium freight (automotive and intermodal) - $7.2B in 2024

Revenue Distribution by Channel

• Freight revenues: 94% ($22.8B)
• Other revenues: 6% ($1.4B)

Income Statement Analysis

• Operating revenue decreased 1% YoY due to lower fuel surcharge revenue
• Operating expenses decreased 4% YoY driven by lower fuel prices and productivity improvements
• Operating income increased 5% YoY to $2.5B

Balance Sheet Analysis

• Total assets increased 1% to $67.7B
• Total liabilities decreased 3% to $50.8B
• Shareholders' equity increased 14% to $16.9B

Cash Flow Analysis

• Operating cash flow increased 12% to $9.3B
• Free cash flow increased 82% to $2.8B

Capital Allocation

Union Pacific maintains a balanced capital allocation strategy with $3.4B planned capital expenditure for 2025, $4.0-4.5B in planned share repurchases, and continued dividend payments. The company returned $4.7B to shareholders in 2024 through dividends ($3.2B) and share repurchases ($1.5B).

Management Commentary

Strong Q4 results represent great capstone to very successful year

Team has fully embraced strategy to lead industry in safety, service, and operational excellence

Service-enabled growth led by strength in Intermodal, Grain, and Industrial Chemicals

Overall Sentiment: Positive, with management confident in operational improvements and growth strategy

Recommendation

Rating: Buy

Reason for Rating: Strong operational execution, improving efficiency metrics, and robust capital return program support a positive outlook

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/24/2025, 9:13:03 AM