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Here's Why You Should Hold on to Union Pacific (UNP) Now

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Shares of Union Pacific Corporation (UNP - Free Report) have outperformed its industry in the last six months. The stock has rallied 11.5%, while the industry has gained 3.6% in the period.



The company’s shareholder-friendly measures are impressive. In November, it raised its quarterly dividend to 66.5 cents per share ($2.66 annualized), representing a hike of 10% over the previous payout. The raised dividend highlights Union Pacific’s commitment to create value for shareholders and underscores its strong financial position as well as bright prospects, going forward.

Moreover, during the first nine months of 2017, the company returned around $4.4 billion to its stockholders through dividends/buybacks. Earlier in 2016, the company returned around $5 billion to its stockholders.

Furthermore, Union Pacific reported better-than-expected results in the third quarter with both the top and the bottom line having improved substantially. Results were aided by higher revenues.

Strong performances by the company's industrial products and intermodal units on a year-to-date basis further raise optimism in the stock. Moreover, its cost-reduction efforts are likely to drive the bottom-line growth going forward.

Union Pacific’s $3.1 billion capital plan announced in 2017 also holds promise. The plan is in line with the company's efforts to promote safety and enhance productivity. Union Pacific’s crossing incident rate has been improving this year compared with the year-ago levels.

In view of the above positives, we believe investors should retain the Union Pacific stock for now.

Zacks Rank & Key Picks

Union Pacific carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Transportation sector are Gol Linhas Aereas Inteligentes S.A. , International Consolidated Airlines Group SA (ICAGY - Free Report) and SkyWest, Inc. (SKYW - Free Report) . While Gol Linhas and International Consolidated Airlines sport a Zacks Rank #1 (Strong Buy), SkyWest carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Gol Linhas, International Consolidated Airlines and SkyWest have surged more than 100%, 52% and 40%, respectively, in a year.

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