Monday, September 12, 2011

Union Pacific (UNP)

Union Pacific is the leading railroad company in the United States spanning 32K miles. Built up through consolidation, this relic of the Gilded Age is still dominating the market. I am bullish on top-line growth: 16% y-o-y in 2011 and 13% in  2012, according to my model. I also expect the rate of operating expense growth to decline from 11% in 2011 to 9.4% in 2012.

I believe that Union Pacific has a stellar executive management focused on value creation. As the economy picks up, I also expect that railroads will experience tremendous gains--especially those that are prepared to acquire competition.

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