Is Union Pacific Corporation (UNP) a Good Investment After This Insider Sale?

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CSX Corporation (NYSE:CSX) expects its growth to be driven by metals shipments and auto parts. CSX has been aggressively purchasing its stock, which is down over 5% year to date. For the first half of 2012, CSX purchased nearly 2% of its outstanding shares or around $300 million in stock.

Another competitor, Norfolk Southern Corp. (NYSE:NSC), is expected to see sales and volume flat in 2012. Norfolk hopes to rebound in 2013 on increased petroleum shipments, with expected revenue to be up 6% by next Christmas. Norfolk is also expected to be able to take market share from trucking companies given its Heartland and Crescent railway network.

Canadian Pacific Railway Limited (NYSE:CP), meanwhile, is expected to see some of the best sales growth in the industry by the end of this year at 9%, followed by 8% expected growth in 2013. A year-ahead sales boost should be driven by a 7% lift in volumes and 2% lift in average revenue per car. Canadian’s key shipment product for 2013 will be a rebound in potash demand. The stock remains a big bet of billionaire Bill Ackman’s, who has over 22% of his fund’s 13F invested in the rail company (see Ackman’s new picks here).

From a valuation standpoint, Union Pacific trades in the mid-range of its peers at 15x earnings, where CSX and Norfolk trade at 11x, and Kanas City Southern and Canadian Pacific are close to 22x each. Obviously, Union Pacific appears attractive; this is a fact that is cemented by its solid forward-looking EPS valuation (13x), which is below its trailing P/E (15x). This suggests investors might be underappreciating the stock’s growth for next year. Union Pacific also trades at a nice PEG of 1.0, with an expected five-year EPS compounded annual growth rate of 14%.

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