Is Union Pacific Corporation (UNP) Soaring Insider Trading Sending a Signal?

The exact reason why investors have been taking up Union Pacific Corporation (NYSE:UNP) stock at a frenetic pace might seem like a bit of a head-scratcher at the moment, but that’s only if you are buying the stock for the wrong reasons. On 08 February, the shares accumulated 0.15 points or 0.09 percent at $161.72 with a light trade volume of 2.953 million shares. After opening the session at $160.57, the shares went as high as $161.76 and as low as $160.2822, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $119 billion and now has 736.11 million shares outstanding. Union Pacific Corporation (UNP) stock has gained 7.56 percent of market value in 21 trading days.

UNP stock has a trailing 3-year beta of 1.09, offering the possibility of a higher rate of return, but also posing more risk. The portion of a company’s profit allocated to each outstanding share of common stock was $7.93 a share in the trailing twelve months. The stock’s value has surged 16.99 percent year to date (YTD) against a rise of 25.4 percent in 12 month’s time. The company’s shares still trade -2.36 percent away from its 1-year high of $165.63 and 33.41 percent up from 52-week low of $121.22. The average consensus rating on the company is 2.2, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

Union Pacific Corporation (UNP) will probably climb 8.06 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $193 price as 12-month high target. This represents a whopping 19.34 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $177.5, which represents a return potential of 9.76 percent when compared to the closing price of the stock of $161.72 on Friday, February 08. The lowest price target for the stock is $134 — slightly more than -17.14 percent from UNP’s current share price.

History has shown that shares in Union Pacific Corporation have gone up on 19 different earnings reaction days and are predicted to add 0.03 percent when the company reports upcoming earnings. Investors will get their next glimpse of UNP’s Q1 earnings on April 18. Analysts are forecasting revenue to climb 4.8 percent to $5.74B in the fiscal first quarter, while earnings are seen soaring by nearly 19.64 percent to $2.01 per share. It earned $2.12 per share, better than the $2.06, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $5.76B, better than the $5.74B analysts expected. Earnings are estimated to increase by 19.4 percent this year, 13.24 percent next year and continue to increase by 16.43 percent annually for the next 5 years.

Let’s take a look at some insider activity at Union Pacific Corporation (NYSE:UNP) and see the pattern. The earliest insider trade took place on 09/24/2018. Knight Robert M Jr parted with a total of 20 thousand shares of company at average share price of $163.81. The total for the sales was set at $3.28 million. After this transaction, the EVP & CHIEF FINANCIAL OFFICER account balance stood at 395.28 thousand shares. The stock lost -1.28 percent since that insider sale. On 08/28/2018, Tennison Lynden L, EVP & CHIEF STRATEGY OFFICER, sold 8.45 thousand shares at a price per share of $151.72. This removed 1.28 million shares from the insider’s fortune and the stock saw a 6.59 percent rally in value since the news became public. This transaction left 85.52 thousand shares in the EVP & CHIEF STRATEGY OFFICER account.

On 04/03/2018, EVP & CHIEF MARKETING OFFICER Whited Elizabeth F performed a sale transaction worth $2.08 million. This sale at $133.79 each has eliminated 15.58 thousand shares from the insider’s portfolio position. Meanwhile, shares have recorded 20.88 percent increase since the transaction was reported. The insider now is left with 59.06 thousand shares remaining in the account. Knight Robert M Jr, who performs the EVP & CHIEF FINANCIAL OFFICER job, sold 13.25 thousand shares for $1.86 million. The disposal occurred on 03/21/2018 was priced at $140 per share. The share price soared 15.51 percent since the reporting date. Knight Robert M Jr now left with a stake of 403.42 thousand UNP stock worth $65.24 million after the insider selling.

The stock is currently hovering around the first support level of $160.75. Below this, the next support is placed in the zone of $159.77. Till the time, the UNP stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 63.1 on daily chart, which may remain a cause for concern. If the price breaks below $159.77 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $162.23 mark may result into a pull-back move towards $162.73 level.

Shares of Union Pacific Corporation (UNP) are trading at a P/E ratio of 20.4 times earnings reported for the past 12 months. The industry UNP operates in has an average P/E of 41.86. Its P/E ratio went as low as 14.25X and as high as 22.17 over the 5-year span.Further, it is sporting a 5.21 on the Price-to-Sales ratio. Compare this with the industry average P/S of 1.61. 78.2 percent is the gross profit margin for Union Pacific Corporation and operating margin sits at 36.5 percent. Along with this, the net profit margin is 49.5 percent.