Union Pacific Corporation (UNP) Stock Valuation — DCF Analysis
Railroads · NYSE
Current Price
$272.70
Intrinsic Value
$326.87
+16.6% margin of safety
COMPETITIVE MOAT
↑Extensive Rail Network
Union Pacific operates a vast, integrated rail network across the western two-thirds of the United States. This extensive infrastructure is incredibly difficult and costly for competitors to replicate.
↑High Switching Costs
Customers are locked into using Union Pacific due to the significant costs and logistical challenges of switching to another rail provider or alternative transportation. This creates a sticky customer base.
↑Economies of Scale
The sheer volume of freight handled allows Union Pacific to achieve significant economies of scale in operations, maintenance, and capital expenditures. This leads to lower per-unit costs compared to smaller players.
INVESTMENT RISKS
↓Regulatory Scrutiny
The railroad industry is heavily regulated, and changes in environmental, safety, or labor laws could significantly impact operating costs and profitability. New regulations could increase compliance burdens.
↓Economic Sensitivity
Union Pacific's business is directly tied to the health of the broader economy and industrial production. A significant economic downturn would reduce freight volumes and revenue.
↓Competition from Other Modes
While rail has advantages, it faces competition from trucking, pipelines, and potentially future innovations in logistics. Shippers can choose alternative transportation methods based on cost and speed.
Base case
UNP base case valuation
A base case discounted cash flow model for UNP estimates an intrinsic value of about $326.87 per share, against a current price of $272.7. The model assumes 10.7% annual free cash flow growth, a 10.0% discount rate, and a 28x exit multiple.
Intrinsic Value
$326.87
Margin of safety
+16.6%
Expected annual return
+3.7%
Base case assumptions: 10.7% annual growth, 10.0% discount rate, 28x exit multiple, 5 year projection. Data as of 2026-06-12.
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)
$41.65
FCF/Share (TTM)
$9.61
ROIC (TTM)
11.6%
ROE (TTM)
40.4%
P/FCF
28.4x
EV/EBITDA
14.7x
FCF Yield
3.52%
Debt/Equity
1.62x
Based on trailing twelve-month data, UNP shows a free cash flow per share of $9.61 and a ROIC of 11.6%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 28.4x and FCF yield of 3.52% are important context metrics when evaluating UNP's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of UNP?
Union Pacific Corporation currently generates $9.61 in free cash flow per share. At the current price of $272.70, 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 28.4x with a free cash flow yield of 3.52%. 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 ($9.61) 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 1.62x, 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 11.6% 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 1.62x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 14.7x, 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 2026-06-12. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.