Have you been paying attention to shares of Union Pacific (UNP - Free Report) ? Shares have been on the move with the stock up 9.7% over the past month. The stock hit a new 52-week high of $170.52 in the previous session. Union Pacific has gained 22.7% since the start of the year compared to the 14.7% move for the Zacks Transportation sector and the 17.8% return for the Zacks Transportation - Rail industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on January 24, 2019, Union Pacific reported EPS of $2.12 versus consensus estimate of $2.06.
For the current fiscal year, Union Pacific is expected to post earnings of $9.07 per share on $23.8 billion in revenues. This represents a 14.66% change in EPS on a 4.23% change in revenues. For the next fiscal year, the company is expected to earn $10.2 per share on $24.84 billion in revenues. This represents a year-over-year change of 12.44% and 4.37%, respectively.
Union Pacific may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Union Pacific has a Value Score of D. The stock's Growth and Momentum Scores are B and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 18.7X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 15.3X versus its peer group's average of 11.8X. Additionally, the stock has a PEG ratio of 1.75. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Union Pacific currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Union Pacific meets the list of requirements. Thus, it seems as though Union Pacific shares could have potential in the weeks and months to come.
How Does Union Pacific Stack Up to the Competition?
Shares of Union Pacific have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including Air Lease (AL - Free Report) , Grupo Aeroportuario del Centro Norte S.A.B. de C.V. (OMAB - Free Report) , and Herc Holdings (HRI - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 35% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Union Pacific, even beyond its own solid fundamental situation.