Union Pacific is the second largest railroad company in the United States operating freight railroads. It operates approximately 51,800 km of railroads in 23 states in the United States.
Freight transport is largely divided into three categories. Cargo is classified into Bulk, Industrial and Premium. The bulk sector refers to the transportation of grains, fertilizers, foodstuffs and coal. The Industrial sector is the transportation of industrial chemicals, metals, minerals, wood and energy raw materials. The Premuim sector is the transportation of finished cars, auto parts, etc.
This is a table of sales increase and decrease by business division. The impact of COVID-19 can be seen as the US economy contracted, resulting in a decline in cargo traffic. In all segments, sales declined 24% quarterly and 14% half-yearly compared to the same period last year. Even after the COVID-19 spread in the US, uncertainty remains about the short-term recovery of the US economy. As a result, it is not known how long it will take to recover the freight volume.
In the quarterly income statement, you can see that operating expenses decreased, but both operating and net income decreased by more than 10%. The reduction in freight transport itself has reduced fuel costs, but it is not enough to make up for the reduction in transport volume.
Overall assets have increased due to the increase in cash equivalents. You can see that both long-term and short-term debts have increased.
Cash from operating activities on a quarterly basis increased. Cash spent on investment decreased by $1.93 billion, but dividend payments increased. As a result, free cash flow increased by $ 0.614 billion.
The figure on the left is the UNP, and the figure on the right is the industry average. Our ROE is maintained above 24% and the industry average is 4% P higher. The average 5-year EPS growth rate is 7.84%. It appears to have been slightly lowered due to a decline in net profit this year. Looking at the Quick Ratio, it is 0.84, which is not a number that would cause liquidity problems. Quick Ratio is more than 1, the more stable. LT Debt to Equity is 160.7%, and has a moderate debt payment ability. The asset turnover is as low as 0.32, but it appears to be so due to the nature of the rail freight industry. The dividend payout ratio is 47.97%, which is reasonable even considering that it is a mature business. The dividend growth rate is increasing at a high 17.95%. Maintaining this figure and increasing, the dividend will double after 4 years. If you steadily collect stocks with long-term investments, you can not only reap trading profits, but also high dividend yields.
Rail freight forwarding is a cost-effective business compared to other modes of transport. It is a key business in the U.S. economy, and it is an essential business that does not end in demand unless the economy stops. UNP is the world's largest operator after BNSF, with a high market share.
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