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Union Pacific Corporation (UNP)

Company Dividend Discount ModelIndustry: RailroadsSector: Industrials

Valuation Snapshot

Stable Growth$111.08 - $171.18$139.02
Multi-Stage$155.60 - $170.38$162.85
Blended Fair Value$150.94
Current Price$236.37
Upside-36.14%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS4.34%7.01%5.365.295.274.674.384.333.833.313.133.91
YoY Growth--1.26%0.44%12.82%6.63%1.08%13.01%15.99%5.48%-19.84%43.63%
Dividend Yield--2.27%2.17%2.62%1.71%1.99%3.07%2.24%2.46%2.96%4.91%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)7,052.00
(-) Cash Dividends Paid (M)3,228.00
(=) Cash Retained (M)3,824.00
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)1,410.40881.50528.90
Cash Retained (M)3,824.003,824.003,824.00
(-) Cash Required (M)-1,410.40-881.50-528.90
(=) Excess Retained (M)2,413.602,942.503,295.10
(/) Shares Outstanding (M)599.63599.63599.63
(=) Excess Retained per Share4.034.915.50
LTM Dividend per Share5.385.385.38
(+) Excess Retained per Share4.034.915.50
(=) Adjusted Dividend9.4110.2910.88
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate0.56%1.56%2.56%
Fair Value$111.08$139.02$171.18
Upside / Downside-53.01%-41.19%-27.58%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)7,052.007,162.167,274.047,387.677,503.077,620.287,848.89
Payout Ratio45.77%54.62%63.46%72.31%81.15%90.00%92.50%
Projected Dividends (M)3,228.003,911.934,616.445,342.006,089.116,858.257,260.22

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate0.56%1.56%2.56%
Year 1 PV (M)3,550.983,586.293,621.60
Year 2 PV (M)3,803.843,879.873,956.65
Year 3 PV (M)3,995.554,115.944,238.72
Year 4 PV (M)4,134.134,301.044,472.95
Year 5 PV (M)4,226.704,441.074,664.06
PV of Terminal Value (M)73,592.5977,325.1581,207.65
Equity Value (M)93,303.7897,649.35102,161.62
Shares Outstanding (M)599.63599.63599.63
Fair Value$155.60$162.85$170.38
Upside / Downside-34.17%-31.10%-27.92%

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