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Union Pacific Hits Fresh 52-Week High on Multiple Tailwinds
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Shares of Union Pacific Corporation (UNP - Free Report) hit a 52-week high of $144.45 during the trading session on May 18 before retracing a bit to close at $143.80. Notably, the stock has performed impressively in the past year with a surge of 33.4%, comfortably outperforming the industry’s 23.3% rally.
Catalysts for the Upsurge
Union Pacific’s initiatives to promote safety and enhance productivity are encouraging. Per data released by the Federal Railroad Administration, the company emerged as the safest railroad in the country for the third consecutive year. It made a significant progress during 2017 toward implementing positive train control (PTC), an advanced system for prevention of collisions and derailments. The PTC also has several other safety features. It intends to spend a further $180 million on PTC in the current year.
The company also performed impressively in the first quarter of 2018 reporting better-than-expected results. Moreover, the top and the bottom line expanded 6.7% and 27.3%, respectively. Results were aided by higher freight revenues, lower tax rate as well as volume growth.
The company’s cost-control efforts are impressive as well. Union Pacific expects operating ratio (operating expenses as a percentage of revenues) to improve in 2018 and targets the same to be 55% for the long term.
The company’s shareholder-friendly measures are a further positive. In February, the company’s board cleared a 10% hike in its quarterly dividend payout to 73 cents per share (annualized $2.92 per share). Moreover, this was the company’s second dividend raise in three months. Last November, the company had announced a 10% increase in its quarterly dividend payout to 66.5 cents.
We expect a spurt in such investor-oriented activities, courtesy of the new tax law. The huge savings generated from the reduced corporate tax rate will further boost free cash flow. Thus, more cash will be left in hand for the company to fund these investor-friendly moves.
Shares of SkyWest, Expeditors and GATX have rallied more than 67%, 36% and 23%, respectively, in a year.
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Union Pacific Hits Fresh 52-Week High on Multiple Tailwinds
Shares of Union Pacific Corporation (UNP - Free Report) hit a 52-week high of $144.45 during the trading session on May 18 before retracing a bit to close at $143.80. Notably, the stock has performed impressively in the past year with a surge of 33.4%, comfortably outperforming the industry’s 23.3% rally.
Catalysts for the Upsurge
Union Pacific’s initiatives to promote safety and enhance productivity are encouraging. Per data released by the Federal Railroad Administration, the company emerged as the safest railroad in the country for the third consecutive year. It made a significant progress during 2017 toward implementing positive train control (PTC), an advanced system for prevention of collisions and derailments. The PTC also has several other safety features. It intends to spend a further $180 million on PTC in the current year.
The company also performed impressively in the first quarter of 2018 reporting better-than-expected results. Moreover, the top and the bottom line expanded 6.7% and 27.3%, respectively. Results were aided by higher freight revenues, lower tax rate as well as volume growth.
The company’s cost-control efforts are impressive as well. Union Pacific expects operating ratio (operating expenses as a percentage of revenues) to improve in 2018 and targets the same to be 55% for the long term.
The company’s shareholder-friendly measures are a further positive. In February, the company’s board cleared a 10% hike in its quarterly dividend payout to 73 cents per share (annualized $2.92 per share). Moreover, this was the company’s second dividend raise in three months. Last November, the company had announced a 10% increase in its quarterly dividend payout to 66.5 cents.
We expect a spurt in such investor-oriented activities, courtesy of the new tax law. The huge savings generated from the reduced corporate tax rate will further boost free cash flow. Thus, more cash will be left in hand for the company to fund these investor-friendly moves.
Zacks Rank & Key Picks
Union Pacific carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Transportation sector are SkyWest, Inc. (SKYW - Free Report) , Expeditors International of Washington, Inc. (EXPD - Free Report) and GATX Corporation (GATX - Free Report) . While Expeditors sports a Zacks Rank #1 (Strong Buy), SkyWest and GATX carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of SkyWest, Expeditors and GATX have rallied more than 67%, 36% and 23%, respectively, in a year.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>