Shareholders might have noticed that Union Pacific Corporation ((NYSE:UN)P) filed its yearly result this time last week. The early response was not positive, with shares down 4.4% to US$207 in the past week. It was a credible result overall, with revenues of US$20b and statutory earnings per share of US$7.88 both in line with analyst estimates, showing that Union Pacific is executing in line with expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there’s been a strong change in the company’s prospects, or if it’s business as usual. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Union Pacific after the latest results.
Check out our latest analysis for Union Pacific
After the latest results, the 24 analysts covering Union Pacific are now predicting revenues of US$21.0b in 2021. If met, this would reflect a satisfactory 7.5% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 21% to US$9.56. Before this earnings report, the analysts had been forecasting revenues of US$21.1b and earnings per share (EPS) of US$9.55 in 2021. The consensus analysts don’t seem to have seen anything in these results that would have changed their view on the business, given there’s been no major change to their estimates.
The analysts reconfirmed their price target of US$227, showing that the business is executing well and in line with expectations. That’s not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Union Pacific at US$250 per share, while the most bearish prices it at US$169. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Union Pacific’s growth to accelerate, with the forecast 7.5% growth ranking favourably alongside historical growth of 0.3% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 9.7% per year. So it’s clear that despite the acceleration in growth, Union Pacific is expected to grow meaningfully slower than the industry average.
The Bottom Line
The most important thing to take away is that there’s been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$227, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn’t be too quick to come to a conclusion on Union Pacific. Long-term earnings power is much more important than next year’s profits. At Simply Wall St, we have a full range of analyst estimates for Union Pacific going out to 2025, and you can see them free on our platform here..
However, before you get too enthused, we’ve discovered 1 warning sign for Union Pacific that you should be aware of.
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