Union Pacific Corporation (UNP) Intrinsic Value & DCF Valuation
Railroads · NYSE
Current Price
$292.19
Intrinsic Value
$364.77
+19.9% margin of safety
What Is Union Pacific Corporation's Intrinsic Value?
As of 2026-07-29, the base-case DCF model estimates the intrinsic value of Union Pacific Corporation (UNP) at $364.77 per share, compared with a market price of $292.19, a margin of safety of +19.9%. The base case assumes 10.9% annual free cash flow growth and a 10.0% discount rate.
Across the sensitivity grid the estimate spans $303.65 to $434.22. Intrinsic value is an estimate built on assumptions, not a fact. A higher discount rate or slower growth pushes the estimate down, while stronger cash flow growth lifts it.
How the DCF works · Recalculate with your own assumptions · What is intrinsic value?
Is Union Pacific Corporation (UNP) Undervalued?
At $292.19, UNP trades about 19.9% below the base-case intrinsic value estimate. That is a real discount, but it stays short of the 30% margin of safety required before calling a stock undervalued.
COMPETITIVE MOAT
↑Extensive Rail Network Infrastructure
Union Pacific operates a vast, irreplaceable rail network across the Western U.S. This physical infrastructure creates significant barriers to entry for new competitors.
↑High Switching Costs for Customers
Shippers face substantial costs and logistical challenges to move their freight from rail to other transportation modes. This locks in existing customer relationships.
↑Economies of Scale in Operations
The sheer volume of freight handled allows Union Pacific to achieve significant cost efficiencies per ton-mile. This scale advantage is difficult for smaller players to replicate.
INVESTMENT RISKS
↓Potential for Significant Fines and Legal Damages
The class-action lawsuit regarding chemical dumping could result in substantial financial liabilities and ongoing legal costs, impacting profitability.
↓Operational Disruptions and Safety Incidents
The nature of rail operations carries inherent risks of accidents and disruptions, which can lead to service interruptions and reputational damage.
↓Economic Downturns Affecting Freight Volumes
Union Pacific's revenue is directly tied to industrial production and consumer demand. A significant economic slowdown would reduce freight volumes and negatively impact earnings.
Base case
UNP base case valuation
Intrinsic Value
$364.77
Margin of safety
+19.9%
Expected annual return
+4.5%
Base case assumptions: 10.9% annual growth, 10.0% discount rate, 27x exit multiple, 5 year projection. Data as of 2026-07-29.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the UNP valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for Union Pacific Corporation respond.
Open DCF Calculator for UNPCompany Overview
Union Pacific Corporation, a prominent American railway enterprise, conducts its primary operations through its subsidiary, Union Pacific Railroad Company. The company provides extensive freight transportation services for a wide array of commodities. Its diverse cargo includes agricultural products like grain, fertilizers, and refrigerated foods; energy resources such as coal, renewables, petroleum, and liquid petroleum gases; and industrial materials encompassing construction products, chemicals, plastics, forest products, metals, ores, soda ash, and sand. Union Pacific also facilitates the movement of finished automobiles, automotive parts, and general merchandise in intermodal containers, serving a varied clientele that spans agricultural processors, energy producers, and industrial manufacturers. As of December 31, 2021, the company's vast rail network stretched 32,452 route miles, strategically connecting major ports along the Pacific and Gulf Coasts with crucial gateways throughout the Midwestern and Eastern United States. Established in 1862, Union Pacific Corporation is headquartered in Omaha, Nebraska.
Financial Metrics — UNP Stock Valuation Data
Revenue/Share (TTM)
$42.82
FCF/Share (TTM)
$10.96
ROIC (TTM)
11.7%
ROE (TTM)
38.6%
P/FCF
26.7x
EV/EBITDA
15.3x
FCF Yield
3.75%
Debt/Equity
1.51x
On a trailing twelve-month basis, UNP generates free cash flow per share of $10.96 alongside a ROIC of 11.7%, both central inputs for a DCF valuation. Its P/FCF ratio of 26.7x and FCF yield of 3.75% then frame how UNP is priced against peers on a cash flow basis.
Frequently Asked Questions
What is the intrinsic value of UNP?
Union Pacific Corporation currently generates $10.96 in free cash flow per share. At the current price of $292.19, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is UNP undervalued?
UNP trades at a P/FCF ratio of 26.7x with a free cash flow yield of 3.75%. This P/FCF is in a moderate range. However, whether UNP is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value UNP stock using DCF?
To perform a DCF valuation on Union Pacific Corporation: (1) Start with the trailing free cash flow per share ($10.96) as the base, (2) project future FCF growth over 5-10 years based on Railroads industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting UNP's risk profile — with a debt-to-equity of 1.51x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to UNP?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Union Pacific Corporation, this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Railroads trends, then discounting those amounts to today's dollars. UNP's ROIC of 11.7% shows moderate capital returns.
How does WACC affect UNP stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For UNP, with a debt-to-equity ratio of 1.51x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 15.3x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See UNP PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Industrials valuationsDCF and P/E value UNP with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-07-29. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.