As Warren Buffet grudgingly acknowledged in the last Berkshire Hathaway annual report, Union Pacific significantly out-performed Buffet’s railroad Burlington Northern Santa Fe. But despite that performance and a healthy dividend, Union Pacific's stock like other transport stocks has taken a beating this year reflecting the general market downturn, reduced China trade and concerns about reduced oil prices dampening production and thus shipments across the United States.
It’s important at these times to examine fundamentals, as well as UNP’s historic stock performance to glean insights that could inform our investment decisions. Our research indicates that momentum investors have erred both on the upside (being too bullish as earning improve) and on the downside (too bearish when earnings moderate).
Let’s look at the UNP’s stock price and its ups and downs since just 2008.
- On August 1, 2008 UNP stock price was $41.95.
- By February 1, 2009 it was down over 55% to $18.76
- Only to recover to $52.49 by May 1, 2011 rising 180% from its Feb 2009 lows.
- It fell again to $40.84 by September 1, 2011 - only to rise to $120.29 by February 1, 2015.
- Since then, it has fallen by 28.7% to $85.70 as of September 1, 2015.
Looking at the history from just 2008, it seems clear that while UNP stock goes through its ups and downs, it has been on a generally upward trajectory. That’s because after all is said and done, this is a great company that’s built to last and as this Fortune magazine article points out it is “the Railroad with profit margins better than Google”.