Valued at a market cap of $137.9 billion, Union Pacific Corporation (UNP) is one of the largest freight railroad companies in the U.S. The Omaha, Nebraska-based company plays a vital role in the U.S. supply chain, transporting a wide range of goods, including agricultural products, chemicals, coal, industrial equipment, and consumer goods.

This rail transport company has lagged behind the broader market over the past 52 weeks. Shares of UNP have declined 7.1% over this time frame, while the broader S&P 500 Index ($SPX) has surged 12.7%. On a YTD basis, the stock is in line with SPX’s marginal uptick. 

Narrowing the focus, UNP has also underperformed the iShares Transportation Average ETF’s (IYT) 2.2% gain over the past 52 weeks. However, it has aligned with the ETF’s marginal rise on a YTD basis. 

On May 12, shares of UNP soared 6.7% after the U.S. and China announced a temporary easing of recent tariff escalations for at least 90 days, following progress on a trade agreement. As railroad stocks are highly sensitive to trade developments, this positive shift boosted investor sentiment, driving up the share prices of various rail carriers, including UNP, CSX Corporation (CSX), and Norfolk Southern Corporation (NSC).

On Apr. 24, UNP’s shares plunged 2% as the company delivered weaker-than-expected Q1 results. Its revenue of $6 billion slightly declined from the year-ago quarter and missed the consensus estimates by nearly 1%. The revenue shortfall was primarily due to reduced fuel surcharge revenue and lower other revenue, which offset gains from volume growth and strong core pricing. Meanwhile, its net income rose marginally year-over-year to $2.70 per share but fell short of the forecasted figure by 1.1%. 

Looking ahead to fiscal 2025, the company anticipates potential pressure on volume growth from a mixed economic environment, fluctuating coal demand, and tough year-over-year comparisons in international intermodal activity. Nevertheless, UNP expects EPS growth to remain consistent with attaining its three-year compound annual growth rate (CAGR) target of high-single to low-double digits.

For the current fiscal year, ending in December, analysts expect UNP’s EPS to grow 4.2% year over year to $11.56. The company’s earnings surprise history is mixed. It topped the consensus estimates in two of the last four quarters, while missing on two other occasions. 

Among the 25 analysts covering the stock, the consensus rating is a “Moderate Buy” which is based on 16 “Strong Buy,” one “Moderate Buy,” seven “Hold,” and one “Strong Sell” rating. 

This configuration is slightly more bullish than two months ago, with 15 analysts suggesting a “Strong Buy” rating. 

On Apr. 28, Stephens maintained an “Overweight” rating on UNP but lowered its price target to $255, which indicates an 11.7% potential upside from the current levels. 

The mean price target of $247.44 represents an 8.4% premium from UNP’s current price levels, while the Street-high price target of $275 suggests an upside potential of 20.5%.