Union Pacific Corp. (UNP) Stock: Can Jim Vena Bring it on Track?

• UNP Stock rallied 8.52% in a week, 20.44% in three months and 12.57% YTD. 
• Former COO Jin Vena is named the next CEO of Union Pacific Corp. 

On July 26, 2023, Union Pacific Corp. (NYSE: UNP) named ex-operating chief Jim Vena as the next chief, rejoiced investors took UNP Stock up by 10%. The exciting news took the share price of the railroad company, which connects 23 states, to hit pretty close to its 52-week high. 

Union Pacific Corp. (UNP) Stock: Financial Analysis

The Omaha, Nebraska-based railroad company recently came into the investors’ crosshairs. It was due to its operating ratio, which increased in the last five quarters. As the ratio indicates the company’s operating expenses as a percentage of revenue, experts argue that a constant increase in this metric is not a good sign. Investors hope that Vena might reverse the train. 

Jim Vena previously worked as Union Pacific’s COO from 2019 to 2021 and is about to sit on the chair from August 14, 2023. This change in management is crucial as the railroad industry faces criticism from shippers, along with the Union States rail regulators, for substandard service levels. It was mainly because the industry still has a lean operational model. 

Union Pacific Corp. (NYSE: UNP): Financial Analysis

At press time, UNP stock is trading at $233.62 with a drop of 1.86%; previous close and open were at $238.00 to $235.45, respectively. The 52-week range is from $183.69 to $242.36, indicating that the share price could beat the high soon. With an average volume of 3.04 Million shares, the market cap is $142.406 Billion. At the same time, its competitor CSX Corporation (NASDAQ: CSX), gained 0.80% to $33.22. 

The trailing twelve-month (TTM) price-to-earnings (P/E) ratio is 20.63, indicating a relatively valued share price. The (TTM) earnings per share (EPS) is $11.32 showing strength. Analysts placed a 2.56 rating for moderate buy and estimated a price target at $233.97 with a 2.7% downside. 

Union Pacific posted its Q2 earnings report on July 26, 2023, where the reported revenue of $5.963 Billion failed to exceed the expected value of $6.09 Billion by 2.09%. At the same time, the reported earnings of $2.57 per share also could not surpass the estimated value of $2.742 per share by 6.29%. These negative earnings pulled the share price down by 1.73%. 

The company’s Q2 net income was $1.6 Billion. Also, the results included the previously disclosed $67 Million in labor expenses and $73 Million in income tax benefits. When comparing the above metrics to the second quarter of 2022, the net income was $1.8 Billion. The (TTM) revenue is $25.07 Billion, and the year-over-year (YoY) quarterly revenue growth is 3.30%. 

Operating revenues fell by 5% to $6 Billion and business volumes measured by total revenue carloads also suffered by 2%. The operating income declined by 12% to $2.2 Billion, and the (TTM) operating margin was 38.87%. 

Union Pacific Corp. (UNP) Stock: Candle Exploration

The news of management change caused a sudden jump and made the share price close to the 52-week high. However, the price action could fall slightly to fill the gap, and the negative earnings could pull the price down. If so, the price should bounce from the crucial support at $219.31 and consolidate forming a base. 

Since November 2022, the price action has been trying to beat the $219.31 mark but has failed. This breakout would need confirmation, which would arrive in upcoming trading sessions. Moreover, the chances of breaking the 52-week high depend on the new management and how they streamline the finances. 

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