Is Union Pacific Fairly Priced After Recent Freight Volume Gains and Regulatory Headlines in 2025?

• Wondering if Union Pacific at around $240 a share is still a buy or if the value has already been priced in? This breakdown will walk you through what the market may be missing.
• After a steady climb with the stock up 3.8% over the last week, 7.8% over the past month, and 7.1% over the last year, investors are starting to question whether this momentum signals durable growth or creeping overvaluation.
• Recently, the stock has been moving on improving freight volume trends across the U.S. rail network and ongoing optimism that supply chain normalization will support rail operators. In addition, ongoing discussions around rail safety regulations and infrastructure investment have kept Union Pacific in the headlines, shaping investor expectations about both risk and long term demand.
• Right now, Union Pacific only scores 2 out of 6 on our valuation checks. This hints that it might not be the obvious bargain some expect, but the real story will come from comparing classic valuation methods with a more nuanced, narrative driven way of thinking about value later in this article.

Union Pacific scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Union Pacific Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model takes the cash Union Pacific is expected to generate in the future, then discounts those cash flows back into today’s dollars to estimate what the business is worth now.

Union Pacific currently produces around $6.1 billion in free cash flow, which analysts expect to grow over time, albeit with some bumps along the way. Simply Wall St uses a 2 Stage Free Cash Flow to Equity model, combining analyst forecasts for the next few years with longer term extrapolations, arriving at projected free cash flow of roughly $9.3 billion by 2029. These future cash flows are then discounted using an appropriate rate to reflect risk and the time value of money.

Putting this together, the model estimates an intrinsic value of about $237.86 per share. With the stock trading near $240, the DCF suggests Union Pacific is roughly 1.1% overvalued, which is effectively a rounding error for long term investors.

Result: ABOUT RIGHT

Union Pacific is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Union Pacific.

Approach 2: Union Pacific Price vs Earnings

For a mature, consistently profitable company like Union Pacific, the Price to Earnings ratio is a practical way to gauge value because it links what investors pay directly to the profits the business is generating today.

What counts as a normal or fair PE depends on how fast earnings are expected to grow and how risky those earnings are. Higher growth and lower risk usually justify a higher multiple, while slower or shakier growth should trade on a discount.

Union Pacific currently trades at about 20.2x earnings, below the broader Transportation industry average of roughly 31.8x, but slightly above the 18.1x average of close peers. Simply Wall St also calculates a proprietary Fair Ratio of around 22.0x, which reflects Union Pacific’s specific growth outlook, profitability, size, industry dynamics and risk profile.

This Fair Ratio is more informative than a simple peer or industry comparison because it adjusts for what actually drives value for Union Pacific, rather than assuming all rail or transport companies deserve the same multiple. Measured against that 22.0x Fair Ratio, the current 20.2x PE suggests the stock is trading at a modest discount.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Union Pacific Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce Narratives, a simple way to connect your view of Union Pacific’s story with a concrete financial forecast and a fair value estimate, all inside the Community page on Simply Wall St. There, millions of investors share how they think revenue, earnings and margins will play out, compare the fair value from their Narrative to today’s share price to decide whether to buy, hold or sell, and then have those Narratives update dynamically as fresh news, regulatory developments or earnings arrive.

For example, one investor might build a bullish Union Pacific Narrative that leans toward a fair value near the high Street target of about $294 if they think merger driven efficiencies and margin gains will stick. Another could build a more cautious Narrative anchored closer to the low target near $213 if they believe carload softness, trade risk and tighter regulation will weigh on growth and justify a lower multiple.

Do you think there's more to the story for Union Pacific? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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