Union Pacific initiates $1.5 billion stock buyback

Union Pacific Corporation (NYSE:UNP), a $150.6 billion market cap railroad giant currently trading at $249.22, announced on Monday that it has entered into accelerated share repurchase agreements (ASRs) with Barclays (LON:BARC) Bank PLC and Citibank, N.A. to buy back $1.5 billion of its common stock. The company is set to receive approximately 4.8 million shares as an initial delivery on Tuesday.

The final quantity of shares repurchased will be determined by the volume-weighted average price of Union Pacific’s stock, less a discount, during the term of the ASR. Adjustments may be made according to the specific terms of the ASR. The transactions are expected to be finalized before the end of the third quarter of 2025, although they can be concluded earlier under certain conditions.

This buyback initiative is part of Union Pacific’s ongoing efforts to return value to shareholders and reflects the company’s financial strength, evidenced by its impressive 55.64% gross profit margin and 18-year streak of consecutive dividend increases. Share repurchase programs are a common method for companies to utilize excess cash and can potentially improve earnings per share and shareholder equity by reducing the number of shares outstanding. According to InvestingPro, the company maintains a moderate debt level and has shown consistent profitability over the last twelve months.

The announcement made in the SEC filing on February 18, 2025, also included forward-looking statements that involve risks and uncertainties which could cause actual results to differ from those projected. Union Pacific has directed investors to consider the risk factors and uncertainties detailed in their SEC filings when evaluating such forward-looking information.

The execution of these ASRs underscores Union Pacific’s commitment to its financial strategies and capital allocation. The company’s stock is traded on the New York Stock Exchange under the ticker UNP, with InvestingPro analysis indicating the stock is currently trading slightly above its Fair Value. The information regarding the share repurchase is based on a press release statement filed with the Securities and Exchange Commission. Investors seeking deeper insights can access comprehensive analysis and 12+ additional ProTips through Union Pacific’s detailed Pro Research Report, available on InvestingPro.

In other recent news, Union Pacific Corporation has issued $2 billion in corporate notes, a move expected to be used for general corporate purposes, such as refinancing existing debt or funding capital expenditures. The transaction involved the sale of two sets of notes, each worth $1 billion, with different maturity dates. BoA Securities, Citigroup (NYSE:C) Global Markets Inc., Morgan Stanley (NYSE:MS) Co. LLC, and Wells Fargo (NYSE:WFC) Securities, LLC were the underwriters for the sale.

In a recent development, Loop Capital downgraded Union Pacific’s stock rating from Hold to Sell and reduced the price target to $200, citing concerns about the impact of new tariffs on the North American auto industry. The firm anticipates these industry headwinds to affect Union Pacific’s bottom line.

On the other hand, Benchmark analyst Nathan Martin increased Union Pacific’s price target to $275, reiterating a Buy rating on the stock, following the company’s fourth-quarter earnings per share (EPS) report of $2.91. Union Pacific’s management highlighted the possibility of further service and network efficiency enhancements, with expected continued strength in grain and industrial chemicals.

Similarly, Baird analysts increased Union Pacific’s price target to $265, maintaining an Outperform rating. The firm highlighted Union Pacific’s effective operating leverage and the company’s ability to scale capacity to meet increased international intermodal volume. Union Pacific was recognized by Baird as a top large-cap pick, reflecting confidence in the company’s strategy.

Lastly, Citi analyst Ariel Rosa raised Union Pacific’s price target to $260, maintaining a Neutral rating on the stock. Despite the high level of execution, Citi’s stance remains Neutral, citing several concerns including Union Pacific’s exposure to cross-border tariffs and an elevated valuation compared to its industry peers.

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