Union Pacific Corporation
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Union Pacific Corporation
A companies’ worth is determined by the value of its shares. The value a common stakeholder gets per share forms the basis of calculating the viability of that company, this figure is known as the book value. To find the book value, calculate the value of all assets then subtract all liabilities of the firm. The increase in value at Union Pacific Corporation in the last five years is from 21.17 to 24.86; showing a positive improvement in the 2016 annual report (Annual report, 2016). There was an increase in the company’s earnings and the same results were reflected in the per share dividend.
The stock representation above shows a one year stock prices trend. It is clear that the value was lowest in November 2016, and has been on the rise in the year 2017 (Union Pacific Corporation, 2017). At the tail end of the computation year the value was at the pick. Investors should consider the time they invest and the time to maturity if they want better returns.
Buying securities (bonds or stocks) issued by Union Pacific Corporation
| Bond Name | Maturity Date | Amount in $Million | Credit Quality | ||
| Union Pac 6.625% | 2/1/2029 | 600 | High | ||
| Union Pac 4.75% | 9/15/2041 | 500 | High | ||
| Price | Coupon % | Coupon Type | Callable | Rule 144A | Yield to maturity % |
| 133.6 | 6.625 | Fixed | Yes | No | 3.59 |
| 118.9 | 4.75 | Fixed | Yes | No | 3.64 |
| Union Pac 6.625% | Union Pac 4.75% | ||||
| Calculations | Calculations | ||||
| Bond Price | 133.6 | Bond Price | 118.9 | ||
| Face or Par value | 1000 | Face or Par value | 1000 | ||
| Maturity years | 12 | Maturity years | 24 | ||
| Current Bond Coupon rate | 6.625 | Current Bond Coupon rate | 4.75 | ||
| Yield to maturity % | 3.59 | Yield to maturity % | 3.64 | ||
| Annual Coupon Interest payment | 66.25 | Annual Coupon Interest payment | 47.5 | ||
| Current Yield of Bond | 49.59% | Current Yield of Bond | 39.95% | ||
| Macaulay Duration | 9.0819 | Macaulay Duration | 15.56 | ||
| Modified Maculay Duration | 8.7672 | Modified Maculay Duration | 15.01 |
Life is all about taking risks, but buying securities from Union Pacific Corporation is worth the risk. Despite the flactuating prices their profits are on the rise (Annual report, 2016). They longer the maturity period the larger the returns. For the members who aspire for huge profits should subscribe to the 24-year plan rather than the 12-year one (Union Pacific Corporation, 2017). Annual returns for the 24-years plan is $ 66.25 while that of the 12 year is at $47.7. Either way there is a profit therefore, nothing can prevent me from buying such a bond.
Reasons for not engaging other companies
Some of the companies are attractive; trading with them seems more predictable than it is the case with Union Pacific Corporation. For example, the American Railcar Industries is attractive (Annual report, 2016). On the contrary their stock value is depreciating instead of appreciating with time. Therefore they are not convincing enough to me. The trend at American Railcar Industries is shown in the chart bellow.
It is clear that the profit in the year 2016 is much greater as compared to that of the year 2017.
References
Annual report, 2016. Available at: http://s21.q4cdn.com/736796105/files/doc_financials/Annual-Report/2016/CP_Annual-Report_2016.PDF
Union Pacific Corporation, 2017. Available at: http://quotes.morningstar.com/chart/stock/chart.action?t=UNP®ion=usa&culture=en-US
