Union Pacific Stock Plunges to 120th in Daily Turnover Amid Merger Talks with Norfolk Southern

On August 18, 2025, Union Pacific (UNP) fell 0.32% to $220.43, with a trading volume of $0.7 billion, ranking 120th in daily turnover. The railroad giant is navigating a potential merger with Norfolk Southern, which analysts estimate has a 56% probability of success. Proponents highlight potential revenue synergies and an expanded network, while risks include regulatory hurdles and integration challenges. The merger could reshape North American rail logistics but may divert management focus and face prolonged scrutiny.

UNP’s financials remain robust, with a P/E ratio of 19.16 and a 2.43% dividend yield. Analysts project 2025 earnings of $11.88 per share, reflecting steady growth. However, the trans-Pacific trade lane’s deterioration poses a near-term threat to cargo volumes, particularly for West Coast operations. Institutional ownership at 80.38% underscores confidence, yet short interest has risen 54.59% month-on-month, signaling growing bearish sentiment.

Price targets from Barclays and Citi range between $260 and $270, suggesting upside potential despite a PEG ratio of 2.14 indicating possible overvaluation. The company’s 55.9% gross margin and 18-year dividend growth streak highlight its resilience. Yet, operational challenges, including recent safety concerns and furloughs, remain under FRA scrutiny. Environmental regulations and competition from trucking further complicate its strategic outlook.

The strategy of buying the top 500 stocks by daily trading volume and holding them for one day from 2022 to 2025 yielded a 0.98% average daily return, with a total return of 31.52% over 365 days. This reflects short-term momentum capture but also underscores market volatility and timing risks inherent in such strategies.