We came across a bullish thesis on Union Pacific Corporation on R. Dennis’s Substack by OppCost. In this article, we will summarize the bulls’ thesis on UNP. Union Pacific Corporation’s share was trading at $266.66 as of February 24th. UNP’s trailing and forward P/E were 20.38 and 18.35, respectively according to Yahoo Finance.
Union Pacific Corporation, through its subsidiary, Union Pacific Railroad Company, operates in the railroad business in the United States. UNP has emerged as a compelling Old Economy opportunity following a strong fourth-quarter earnings report and the transformative announcement of a proposed merger with Norfolk Southern, which pushed the stock to a 51-week high near $261.
The merger represents a historic strategic catalyst, with the potential to create the first truly transcontinental railroad in the United States, enabling single-line service that could reduce handoff delays by roughly 35% and unlock tens of thousands of new shipping lanes currently dependent on trucking.
Analysts also see meaningful revenue expansion from improved access to underserved freight corridors, supporting long-term growth into the latter part of the decade. At the same time, Union Pacific is strengthening its operational foundation through its PSR 2.0 model, delivering industry-leading efficiency metrics, including recognition as North America’s top intermodal provider, alongside a $1.2 billion modernization partnership with Wabtec to improve fuel efficiency and reliability across its locomotive fleet.
Record quarterly adjusted EPS of $2.86 underscores the company’s pricing power even in a muted macro environment. Against this backdrop, a large institutional options trade—buying April 2026 $265 calls while selling January 2027 $220 puts—signals conviction that current momentum can continue while establishing a perceived valuation floor roughly 16% below prevailing prices.
This downside confidence is reinforced by expectations of up to $12 billion in annual free cash flow within three years of a successful merger, which could support aggressive share repurchases and provide structural demand for the stock. Overall, the combination of a transformational merger catalyst, operational excellence, and strong capital return potential creates a favorable risk-reward profile with multiple pathways for upside.
Previously, we covered a bullish thesis on Union Pacific Corporation (UNP) by Peter Thomason in May 2025, which highlighted the structural advantages of the railroad oligopoly, durable pricing power, and predictable cash flows. UNP’s stock price has appreciated by approximately 22.97% since our coverage. OppCost shares a similar view but emphasizes on merger-driven catalysts and operational efficiency unlocking near-term upside.
Union Pacific Corporation is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 99 hedge fund portfolios held UNP at the end of the third quarter which was 89 in the previous quarter. While we acknowledge the risk and potential of UNP as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than UNP and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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Disclosure: None.
