Intrinsic value of Union Pacific - UNP

Previous Close

$141.25

  Intrinsic Value

$59.37

stock screener

  Rating & Target

str. sell

-58%

Previous close

$141.25

 
Intrinsic value

$59.37

 
Up/down potential

-58%

 
Rating

str. sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of UNP stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -8.58
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
  4.87
  4.89
  4.90
  4.91
  4.92
  4.92
  4.93
  4.94
  4.95
  4.95
  4.96
  4.96
  4.96
  4.97
  4.97
  4.97
  4.98
Revenue, $m
  19,941
  20,838
  21,786
  22,788
  23,844
  24,958
  26,132
  27,369
  28,672
  30,044
  31,488
  33,008
  34,606
  36,288
  38,056
  39,915
  41,870
  43,925
  46,084
  48,354
  50,739
  53,245
  55,878
  58,644
  61,551
  64,604
  67,811
  71,179
  74,718
  78,434
  82,337
Variable operating expenses, $m
 
  12,149
  12,702
  13,285
  13,901
  14,550
  15,235
  15,956
  16,716
  17,516
  18,358
  19,243
  20,175
  21,156
  22,187
  23,271
  24,410
  25,608
  26,867
  28,190
  29,581
  31,042
  32,577
  34,190
  35,884
  37,664
  39,534
  41,498
  43,560
  45,727
  48,003
Fixed operating expenses, $m
 
  1,090
  1,117
  1,145
  1,173
  1,203
  1,233
  1,264
  1,295
  1,328
  1,361
  1,395
  1,430
  1,465
  1,502
  1,540
  1,578
  1,617
  1,658
  1,699
  1,742
  1,785
  1,830
  1,876
  1,923
  1,971
  2,020
  2,071
  2,122
  2,175
  2,230
Total operating expenses, $m
  12,669
  13,239
  13,819
  14,430
  15,074
  15,753
  16,468
  17,220
  18,011
  18,844
  19,719
  20,638
  21,605
  22,621
  23,689
  24,811
  25,988
  27,225
  28,525
  29,889
  31,323
  32,827
  34,407
  36,066
  37,807
  39,635
  41,554
  43,569
  45,682
  47,902
  50,233
Operating income, $m
  7,272
  7,600
  7,968
  8,358
  8,770
  9,205
  9,664
  10,149
  10,661
  11,201
  11,770
  12,369
  13,001
  13,667
  14,367
  15,105
  15,882
  16,699
  17,559
  18,464
  19,416
  20,418
  21,471
  22,579
  23,744
  24,969
  26,257
  27,611
  29,035
  30,532
  32,105
EBITDA, $m
  9,310
  9,726
  10,191
  10,682
  11,202
  11,751
  12,330
  12,941
  13,586
  14,266
  14,982
  15,737
  16,531
  17,368
  18,249
  19,177
  20,153
  21,180
  22,260
  23,397
  24,592
  25,849
  27,171
  28,561
  30,023
  31,559
  33,174
  34,872
  36,657
  38,533
  40,504
Interest expense (income), $m
  652
  641
  710
  785
  864
  948
  1,036
  1,128
  1,226
  1,329
  1,437
  1,551
  1,671
  1,798
  1,930
  2,070
  2,217
  2,371
  2,533
  2,704
  2,883
  3,072
  3,269
  3,477
  3,696
  3,925
  4,166
  4,420
  4,686
  4,965
  5,258
Earnings before tax, $m
  6,766
  6,959
  7,258
  7,572
  7,905
  8,257
  8,629
  9,021
  9,435
  9,872
  10,332
  10,818
  11,330
  11,869
  12,437
  13,035
  13,665
  14,328
  15,026
  15,760
  16,533
  17,346
  18,202
  19,102
  20,048
  21,044
  22,091
  23,192
  24,349
  25,567
  26,846
Tax expense, $m
  2,533
  1,879
  1,960
  2,045
  2,134
  2,229
  2,330
  2,436
  2,547
  2,665
  2,790
  2,921
  3,059
  3,205
  3,358
  3,519
  3,690
  3,869
  4,057
  4,255
  4,464
  4,683
  4,914
  5,157
  5,413
  5,682
  5,964
  6,262
  6,574
  6,903
  7,249
Net income, $m
  4,233
  5,080
  5,298
  5,528
  5,771
  6,028
  6,299
  6,585
  6,888
  7,206
  7,543
  7,897
  8,271
  8,664
  9,079
  9,516
  9,975
  10,459
  10,969
  11,505
  12,069
  12,663
  13,287
  13,944
  14,635
  15,362
  16,126
  16,930
  17,775
  18,664
  19,598

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,337
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  55,718
  56,780
  59,364
  62,091
  64,970
  68,005
  71,205
  74,576
  78,126
  81,864
  85,799
  89,939
  94,295
  98,877
  103,695
  108,761
  114,087
  119,686
  125,570
  131,754
  138,253
  145,082
  152,256
  159,794
  167,713
  176,032
  184,770
  193,949
  203,590
  213,716
  224,352
Adjusted assets (=assets-cash), $m
  54,381
  56,780
  59,364
  62,091
  64,970
  68,005
  71,205
  74,576
  78,126
  81,864
  85,799
  89,939
  94,295
  98,877
  103,695
  108,761
  114,087
  119,686
  125,570
  131,754
  138,253
  145,082
  152,256
  159,794
  167,713
  176,032
  184,770
  193,949
  203,590
  213,716
  224,352
Revenue / Adjusted assets
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
  0.367
Average production assets, $m
  49,628
  51,867
  54,227
  56,718
  59,347
  62,120
  65,043
  68,122
  71,365
  74,780
  78,374
  82,156
  86,135
  90,320
  94,721
  99,349
  104,214
  109,328
  114,704
  120,353
  126,289
  132,527
  139,081
  145,966
  153,200
  160,799
  168,781
  177,165
  185,972
  195,222
  204,937
Working capital, $m
  -44
  -646
  -675
  -706
  -739
  -774
  -810
  -848
  -889
  -931
  -976
  -1,023
  -1,073
  -1,125
  -1,180
  -1,237
  -1,298
  -1,362
  -1,429
  -1,499
  -1,573
  -1,651
  -1,732
  -1,818
  -1,908
  -2,003
  -2,102
  -2,207
  -2,316
  -2,431
  -2,552
Total debt, $m
  15,007
  15,787
  17,451
  19,208
  21,062
  23,016
  25,077
  27,248
  29,534
  31,942
  34,475
  37,142
  39,947
  42,898
  46,000
  49,263
  52,693
  56,299
  60,088
  64,071
  68,256
  72,654
  77,274
  82,129
  87,228
  92,586
  98,213
  104,124
  110,333
  116,854
  123,704
Total liabilities, $m
  35,786
  36,566
  38,230
  39,987
  41,841
  43,795
  45,856
  48,027
  50,313
  52,721
  55,254
  57,921
  60,726
  63,677
  66,779
  70,042
  73,472
  77,078
  80,867
  84,850
  89,035
  93,433
  98,053
  102,908
  108,007
  113,365
  118,992
  124,903
  131,112
  137,633
  144,483
Total equity, $m
  19,932
  20,214
  21,133
  22,105
  23,129
  24,210
  25,349
  26,549
  27,813
  29,144
  30,544
  32,018
  33,569
  35,200
  36,915
  38,719
  40,615
  42,608
  44,703
  46,905
  49,218
  51,649
  54,203
  56,887
  59,706
  62,667
  65,778
  69,046
  72,478
  76,083
  79,869
Total liabilities and equity, $m
  55,718
  56,780
  59,363
  62,092
  64,970
  68,005
  71,205
  74,576
  78,126
  81,865
  85,798
  89,939
  94,295
  98,877
  103,694
  108,761
  114,087
  119,686
  125,570
  131,755
  138,253
  145,082
  152,256
  159,795
  167,713
  176,032
  184,770
  193,949
  203,590
  213,716
  224,352
Debt-to-equity ratio
  0.753
  0.780
  0.830
  0.870
  0.910
  0.950
  0.990
  1.030
  1.060
  1.100
  1.130
  1.160
  1.190
  1.220
  1.250
  1.270
  1.300
  1.320
  1.340
  1.370
  1.390
  1.410
  1.430
  1.440
  1.460
  1.480
  1.490
  1.510
  1.520
  1.540
  1.550
Adjusted equity ratio
  0.342
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  4,233
  5,080
  5,298
  5,528
  5,771
  6,028
  6,299
  6,585
  6,888
  7,206
  7,543
  7,897
  8,271
  8,664
  9,079
  9,516
  9,975
  10,459
  10,969
  11,505
  12,069
  12,663
  13,287
  13,944
  14,635
  15,362
  16,126
  16,930
  17,775
  18,664
  19,598
Depreciation, amort., depletion, $m
  2,038
  2,126
  2,222
  2,325
  2,432
  2,546
  2,666
  2,792
  2,925
  3,065
  3,212
  3,367
  3,530
  3,702
  3,882
  4,072
  4,271
  4,481
  4,701
  4,932
  5,176
  5,431
  5,700
  5,982
  6,279
  6,590
  6,917
  7,261
  7,622
  8,001
  8,399
Funds from operations, $m
  8,270
  7,206
  7,521
  7,852
  8,203
  8,574
  8,965
  9,377
  9,812
  10,271
  10,755
  11,264
  11,801
  12,366
  12,961
  13,587
  14,246
  14,940
  15,670
  16,437
  17,245
  18,094
  18,987
  19,926
  20,914
  21,952
  23,043
  24,191
  25,397
  26,665
  27,997
Change in working capital, $m
  745
  -28
  -29
  -31
  -33
  -35
  -36
  -38
  -40
  -43
  -45
  -47
  -50
  -52
  -55
  -58
  -61
  -64
  -67
  -70
  -74
  -78
  -82
  -86
  -90
  -95
  -99
  -104
  -110
  -115
  -121
Cash from operations, $m
  7,525
  7,233
  7,550
  7,883
  8,236
  8,608
  9,001
  9,416
  9,853
  10,314
  10,800
  11,311
  11,850
  12,418
  13,016
  13,645
  14,307
  15,004
  15,737
  16,508
  17,319
  18,172
  19,069
  20,012
  21,004
  22,047
  23,143
  24,295
  25,507
  26,780
  28,118
Maintenance CAPEX, $m
  0
  -2,034
  -2,126
  -2,222
  -2,325
  -2,432
  -2,546
  -2,666
  -2,792
  -2,925
  -3,065
  -3,212
  -3,367
  -3,530
  -3,702
  -3,882
  -4,072
  -4,271
  -4,481
  -4,701
  -4,932
  -5,176
  -5,431
  -5,700
  -5,982
  -6,279
  -6,590
  -6,917
  -7,261
  -7,622
  -8,001
New CAPEX, $m
  -3,505
  -2,239
  -2,360
  -2,492
  -2,629
  -2,773
  -2,923
  -3,079
  -3,243
  -3,415
  -3,594
  -3,782
  -3,979
  -4,185
  -4,401
  -4,628
  -4,865
  -5,114
  -5,375
  -5,649
  -5,936
  -6,238
  -6,554
  -6,886
  -7,234
  -7,599
  -7,982
  -8,385
  -8,807
  -9,250
  -9,715
Cash from investing activities, $m
  -3,393
  -4,273
  -4,486
  -4,714
  -4,954
  -5,205
  -5,469
  -5,745
  -6,035
  -6,340
  -6,659
  -6,994
  -7,346
  -7,715
  -8,103
  -8,510
  -8,937
  -9,385
  -9,856
  -10,350
  -10,868
  -11,414
  -11,985
  -12,586
  -13,216
  -13,878
  -14,572
  -15,302
  -16,068
  -16,872
  -17,716
Free cash flow, $m
  4,132
  2,960
  3,064
  3,169
  3,282
  3,403
  3,532
  3,671
  3,818
  3,974
  4,141
  4,317
  4,504
  4,703
  4,913
  5,135
  5,370
  5,619
  5,881
  6,158
  6,450
  6,758
  7,084
  7,427
  7,788
  8,169
  8,571
  8,993
  9,439
  9,908
  10,402
Issuance/(repayment) of debt, $m
  970
  1,538
  1,664
  1,757
  1,854
  1,955
  2,060
  2,171
  2,286
  2,407
  2,534
  2,666
  2,805
  2,951
  3,103
  3,263
  3,430
  3,606
  3,790
  3,983
  4,185
  4,398
  4,621
  4,854
  5,100
  5,357
  5,628
  5,911
  6,209
  6,521
  6,849
Issuance/(repurchase) of shares, $m
  -3,105
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -2,367
  1,538
  1,664
  1,757
  1,854
  1,955
  2,060
  2,171
  2,286
  2,407
  2,534
  2,666
  2,805
  2,951
  3,103
  3,263
  3,430
  3,606
  3,790
  3,983
  4,185
  4,398
  4,621
  4,854
  5,100
  5,357
  5,628
  5,911
  6,209
  6,521
  6,849
Total cash flow (excl. dividends), $m
  1,765
  4,499
  4,728
  4,926
  5,136
  5,358
  5,593
  5,841
  6,104
  6,382
  6,675
  6,984
  7,310
  7,653
  8,016
  8,398
  8,800
  9,224
  9,670
  10,140
  10,635
  11,156
  11,704
  12,281
  12,888
  13,526
  14,198
  14,905
  15,648
  16,429
  17,251
Retained Cash Flow (-), $m
  770
  -861
  -920
  -971
  -1,025
  -1,081
  -1,139
  -1,200
  -1,264
  -1,331
  -1,401
  -1,474
  -1,551
  -1,631
  -1,715
  -1,804
  -1,896
  -1,993
  -2,095
  -2,202
  -2,314
  -2,431
  -2,554
  -2,683
  -2,819
  -2,961
  -3,111
  -3,268
  -3,432
  -3,605
  -3,786
Prev. year cash balance distribution, $m
 
  579
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  4,217
  3,808
  3,955
  4,111
  4,277
  4,454
  4,641
  4,840
  5,051
  5,274
  5,510
  5,759
  6,022
  6,301
  6,594
  6,904
  7,231
  7,576
  7,939
  8,322
  8,725
  9,150
  9,598
  10,069
  10,565
  11,087
  11,637
  12,216
  12,824
  13,465
Discount rate, %
 
  5.30
  5.57
  5.84
  6.14
  6.44
  6.76
  7.10
  7.46
  7.83
  8.22
  8.63
  9.06
  9.52
  9.99
  10.49
  11.02
  11.57
  12.15
  12.76
  13.39
  14.06
  14.77
  15.50
  16.28
  17.09
  17.95
  18.85
  19.79
  20.78
  21.82
PV of cash for distribution, $m
 
  4,005
  3,417
  3,335
  3,240
  3,130
  3,007
  2,871
  2,722
  2,563
  2,393
  2,216
  2,033
  1,847
  1,660
  1,476
  1,297
  1,124
  962
  811
  674
  551
  442
  349
  270
  204
  152
  110
  78
  54
  36
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Union Pacific Corporation is a railroad operating company in the United States. The Company operates through its principal operating company, Union Pacific Railroad Company (UPRR). Its business mix includes Agricultural Products, Automotive, Chemicals, Coal, Industrial Products and Intermodal. Its freight traffic consists of bulk, manifest, and premium business. Bulk traffic primarily consists of coal, grain, soda ash, ethanol, rock and crude oil shipped in unit trains-trains transporting a single commodity from one origin to one destination. Manifest traffic includes individual carload or less than train-load business involving commodities, such as lumber, paper, food and chemicals. The transportation of finished vehicles, auto parts, intermodal containers and truck trailers are included as part of its premium business. As of December 31, 2016, its network included 32,070 route miles, linking Pacific Coast and Gulf Coast ports with the Midwest and Eastern United States gateways.

FINANCIAL RATIOS  of  Union Pacific (UNP)

Valuation Ratios
P/E Ratio 27.2
Price to Sales 5.8
Price to Book 5.8
Price to Tangible Book
Price to Cash Flow 15.3
Price to Free Cash Flow 28.7
Growth Rates
Sales Growth Rate -8.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -24.6%
Cap. Spend. - 3 Yr. Gr. Rate 0.1%
Financial Strength
Quick Ratio 2
Current Ratio 0.1
LT Debt to Equity 71.5%
Total Debt to Equity 75.3%
Interest Coverage 11
Management Effectiveness
Return On Assets 8.4%
Ret/ On Assets - 3 Yr. Avg. 9.6%
Return On Total Capital 12.1%
Ret/ On T. Cap. - 3 Yr. Avg. 14.2%
Return On Equity 20.8%
Return On Equity - 3 Yr. Avg. 22.7%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 81.2%
Gross Margin - 3 Yr. Avg. 78.5%
EBITDA Margin 47.4%
EBITDA Margin - 3 Yr. Avg. 46.5%
Operating Margin 36.5%
Oper. Margin - 3 Yr. Avg. 36.6%
Pre-Tax Margin 33.9%
Pre-Tax Margin - 3 Yr. Avg. 34.6%
Net Profit Margin 21.2%
Net Profit Margin - 3 Yr. Avg. 21.6%
Effective Tax Rate 37.4%
Eff/ Tax Rate - 3 Yr. Avg. 37.7%
Payout Ratio 44.4%

UNP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the UNP stock intrinsic value calculation we used $19941 million for the last fiscal year's total revenue generated by Union Pacific. The default revenue input number comes from 2016 income statement of Union Pacific. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our UNP stock valuation model: a) initial revenue growth rate of 4.5% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 5.3%, whose default value for UNP is calculated based on our internal credit rating of Union Pacific, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Union Pacific.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of UNP stock the variable cost ratio is equal to 58.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1063 million in the base year in the intrinsic value calculation for UNP stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.5% for Union Pacific.

Corporate tax rate of 27% is the nominal tax rate for Union Pacific. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the UNP stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for UNP are equal to 248.9%.

Life of production assets of 24.4 years is the average useful life of capital assets used in Union Pacific operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for UNP is equal to -3.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $19932 million for Union Pacific - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 793.139 million for Union Pacific is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Union Pacific at the current share price and the inputted number of shares is $112.0 billion.

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Financial statements of UNP
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