Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Union Pacific Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 3.4% to 6.5% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 29, DPO 24, DIO 22). At a 8.3% WACC with mid-year discounting, the terminal value (87% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 18.7x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $448.73 per share, suggesting UNP is undervalued by 87.2% at the current price of $239.72.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 9,380 | 9,847 | 11,110 | 13,051 | 13,900 | 14,248 |
| (−) Net Interest | 1,345 | 1,412 | 1,593 | 1,871 | 1,993 | 2,043 |
| (+) D&A | 3,481 | 3,630 | 3,679 | 3,830 | 4,165 | 4,269 |
| EBITDA | 14,206 | 14,889 | 16,383 | 18,753 | 20,058 | 20,560 |
| (−) Tax | 2,136 | 2,242 | 2,530 | 2,972 | 3,165 | — |
| (−) CapEx | 3,682 | 3,865 | 4,361 | 5,123 | 5,457 | — |
| (−) ΔWC | 98 | 97 | 261 | 402 | 176 | — |
| Free Cash Flow (FCF) | 8,290 | 8,685 | 9,230 | 10,256 | 11,261 | — |
| Peers' EBITDA Multiple | 18.7x | |||||
| Terminal Value | 384,260 | |||||
| WACC / Discount Rate | 8.30% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 7,966 | 7,706 | 7,563 | 7,760 | 7,867 | 257,962 |
| Enterprise Value | 296,824 | |||||
| Projection Period | 38,862 | 13.1% | ||||
| Terminal Value | 257,962 | 86.9% | ||||
| (−) Current Net Debt | 30,539 | |||||
| Equity Value | 266,285 | |||||
| (÷) Outstanding Shares | 594M | |||||
| Fair Price | $449 | +87.2% | ||||
| WACC \ EV/EBITDA Exit Multiple | 14.7x | 16.7x | 18.7x | 20.7x | 22.7x |
|---|---|---|---|---|---|
| 6.3% | $392 | $443 | $494 | $545 | $596 |
| 7.3% | $373 | $422 | $471 | $520 | $568 |
| 8.3% | $356 | $402 | $449 | $495 | $542 |
| 9.3% | $339 | $383 | $428 | $472 | $517 |
| 10.3% | $323 | $365 | $408 | $450 | $493 |
Current price: $239.72. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.