Monday, August 10, 2015

Recent Buy V



After selling my BAX and BXLT positions, I have additional capital to invest - so I reviewed my August screen for opportunities.

If you follow my blog, UNP appeared on my August Screen.




The screen essentially looks for companies that have their PEs below their median PE and yield above their median yields. Moreover, in this month my focus is on companies with wide moat.


Union Pacific Corporation (UNP) manages the Union Pacific Railroad Company which is one of the largest railroads and transportation companies in North America. UNP covers 6 areas of business: agricultural, automotive, chemicals, energy, industrial products, and intermodal freight transport.

You can check out my previous analysis below:
I’ve updated the criteria table with the new information - mostly from M* and S&P Capital IQ - where they’ve lowered the fair price estimate to $114 & $112 respectively. Both companies rate UNP with four stars which is a good indication to buy.


UNP 8/2015
Area
Criteria
CheckList
Comment
Quality Company
Dividend Growth
>5 years
Yes
9 Years
ROE/Op Margin
Stable
Yes
Stable
Long term Avg Growth
Stable
Yes
Stable
FCF over Dividends
Yes
Yes
Stable
M* Moat
Wide Moat
Yes
Wide
M* & S&P
Credit Rating
> BBB+
Yes
A
Cash to Debt & Interest Coverage, Debt to Equity
Cash Debt >1 or Interest > 5
Yes
Cash to Debt 0.15
Interest Coverage 15.6
Debt to Equity 63.55
M* & S&P Stars
> 3 Stars for both
Yes
M* 4 Stars S&P CapIQ 4 Stars A+ quality rating
Payout Ratio
<60%
Yes
36.00%
Dividend Growth
& Yield
Dividend Yield
>3%
No
2.40%
Dividend Growth
>5%
Yes
29.40%
Chowder
>12%
Yes
31.80%
Valuation
Yield/Avg Yield
>1.1
Yes
1.26
Dividend Yield Theory Mid Point
Below Mid Point
Yes
Mid Point 111.
Low Point 74
P/E
Below Mid Point
No - Current PE Yes - Forward PE
Median 15.38 Current 15.9
DRRM
~10%
Yes
Assuming 6% growth; projected return=10.74%
M* Estimate
<M* est
Yes
M* 114
S&P Estimate
< S&P cap IQ est
Yes
S&P Cap IQ 112


My estimation of the fair price of UNP is around $110 (+/- $10). Therefore, I think UNP is trading below the fair price range.


Transaction Details


Security
Price
Quantity
Amount
UNP
93.07
15
1402.97


This will add an estimated $33.00 forward dividends per year. I still have additional capital from my BAX and BXLT sell to increase my forward dividends.


Did you make any recent buys? What do you think of UNP?

D4s

4 comments:

  1. Great buy and on a serious dip. Nice work Div4son! I think you will be very happy with this purchase over the next 24-months. I had an options put at $94 on UNP and it went below to your buy price but the stock settled at $96 before option expiration. I am jealous of your buy.

    ReplyDelete
    Replies
    1. DD, you just need to wait a few days (china currency devaluation) for the next opportunities.
      As for me, I am just averaging down.
      D4s

      Delete
  2. Another great purchase, Div4Son. UNP is a great company and one of the best run railroads in the market.

    Best wishes
    R2R

    ReplyDelete
    Replies
    1. R2R, thanks for visiting.
      I agree with your assessment on UNP. My screen this month is for companies with wide moats. The other option is NSC which is also very attractive this month.
      D4s

      Delete