Union Pacific (UNP) – A Rail Giant Trading at a Discount With a Historic Deal on the Table
Union Pacific has had a rough stretch in 2025, slipping about 3% year-to-date. But we see that weakness as an opportunity rather than a red flag. At roughly 18 times forward earnings, shares trade at a clear discount to the S&P 500’s multiple of 24.7 and below the company’s long-term average. That means investors can step into a market leader at a bargain price.
The big story, of course, is Union Pacific’s planned $85 billion acquisition of Norfolk Southern—a deal that would create the country’s first coast-to-coast rail network spanning more than 50,000 miles. Regulators still need to sign off, and the review will likely be contentious. But recent developments have brought more clarity, and the odds of approval now look stronger, with a 65–70% chance of success. If the deal goes through, it would be transformative, unlocking efficiencies and giving Union Pacific unparalleled reach across the U.S. freight system.
Here’s what makes this setup so compelling: even if regulators block the deal, Union Pacific still looks attractive on its own. The company continues to execute well operationally, positioning itself for strong third-quarter earnings while trading at a valuation that already bakes in a lot of the uncertainty. In other words, investors don’t need a merger approval for this stock to deliver upside—though the deal would add a powerful catalyst.
