Union Pacific Corporation

“Union Pacific owns one of the most durable franchises in American business — a physically irreplaceable western rail network with regulatory moats, captive shippers, and a Mexico nearshoring tailwind — generating ROIC 600-800bps above WACC and near-perfect FCF conversion. However, at ~22x trailing earnings with only 2-3% organic revenue growth, the market has already priced this quality in, capping 10-year total returns at approximately 7-9% annualized. The pending Norfolk Southern merger application introduces significant balance sheet and integration risk that warrants caution. This is a business to own at the right price — that price is 10-15% lower than today.”