DCF Studio

    UNP · NYQ · Industrials

    Union Pacific Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 201.22

    Market price

    USD 307.00

    Implied upside

    -34.5%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    AdjustedCapital expenditure runs at 14.8% of revenue against depreciation of 9.6%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD 201.22-34.5%
    Exit multiple
    USD 317.10+3.3%
    Market price
    USD 307.00

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn5bn10bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 27.4bnUSD 29.0bnUSD 30.5bnUSD 32.0bnUSD 33.4bnUSD 34.8bnUSD 36.1bnUSD 37.3bnUSD 38.4bnUSD 39.3bn+4.1%
    EBITUSD 10.8bnUSD 11.4bnUSD 12.0bnUSD 12.6bnUSD 13.2bnUSD 13.7bnUSD 14.2bnUSD 14.7bnUSD 15.1bnUSD 15.5bn+4.1%
    NOPATUSD 8.5bnUSD 9.0bnUSD 9.5bnUSD 10.0bnUSD 10.4bnUSD 10.8bnUSD 11.3bnUSD 11.6bnUSD 12.0bnUSD 12.3bn+4.1%
    Add depreciation & amortisationUSD 2.6bnUSD 2.8bnUSD 2.9bnUSD 3.1bnUSD 3.2bnUSD 3.4bnUSD 3.5bnUSD 3.6bnUSD 3.7bnUSD 3.8bn+4.1%
    Less capital expenditureUSD -4.1bnUSD -4.3bnUSD -4.5bnUSD -4.7bnUSD -4.9bnUSD -5.1bnUSD -5.3bnUSD -5.5bnUSD -5.6bnUSD -5.7bn+3.9%
    Capex, % of revenue14.8%14.8%14.8%14.7%14.7%14.7%14.7%14.6%14.6%14.6%-
    Less increase in working capitalUSD -216.6mUSD -117.6mUSD -115.5mUSD -112.5mUSD -108.3mUSD -103.1mUSD -96.9mUSD -89.5mUSD -81.2mUSD -72.0m-11.5%
    Free cashflow to firmUSD 6.9bnUSD 7.4bnUSD 7.8bnUSD 8.2bnUSD 8.6bnUSD 9.0bnUSD 9.3bnUSD 9.7bnUSD 10.0bnUSD 10.2bn+4.5%
    Discount factor0.96220.89080.82470.76350.70680.65440.60580.56080.51920.4807-
    Present valueUSD 6.6bnUSD 6.6bnUSD 6.5bnUSD 6.3bnUSD 6.1bnUSD 5.9bnUSD 5.7bnUSD 5.4bnUSD 5.2bnUSD 4.9bn-
    Present Value Of The ForecastUSD 59.1bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.896Reported 0.845, pulled toward 1.0 (Blume)
    Cost of equity8.68%Risk-free + beta x equity risk premium
    Cost of debt5.44%Risk-free + 55bp, the spread for a AA rating at 7.5x interest cover. Book interest / average debt was lower, at 4.0%.
    Market capitalisationUSD 182.4bn84.7% of capital
    Total debtUSD 32.8bn15.3% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC8.02%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 201.22

    61% of EV

    Forecast FCFF, final year
    USD 10.2bn
    Capex at depreciation, working capital in reinvestment
    USD 12.3bn
    Less reinvestment at g/ROIC (15.9% of NOPAT)
    USD -2.0bn
    Capitalised
    USD 10.3bn
    ROIC (reported)
    15.7%
    Terminal value, undiscounted
    USD 191.5bn
    Terminal value, discounted
    USD 92.1bn
    Enterprise value
    USD 151.2bn
    Less net debt
    USD 31.3bn
    Equity value
    USD 119.9bn

    Exit at 17.4x EBITDA

    Value per shareUSD 317.10

    73% of EV

    Terminal value, undiscounted
    USD 335.2bn
    Terminal value, discounted
    USD 161.1bn
    Enterprise value
    USD 220.3bn
    Less net debt
    USD 31.3bn
    Equity value
    USD 189.0bn

    Spread between methods: 45%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.02%300.14319.79345.51380.29429.55
    7.02%234.78244.79257.35273.44294.54
    8.02%189.60194.80201.22209.20219.28
    9.02%156.53159.13162.35166.32171.28
    10.02%131.31132.42133.85135.68137.98

    Outlined: this model. Green text: above today's price of 307.00. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year-0.5%4.8%9.1%
    EBIT margin40.2%39.4%55.1%
    Discount rate-8.0%6.4%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.