Union Pacific Corp. (NYSE:UNP)

Return on Assets (ROA)

The Return on Assets shows a generally positive trend beginning from the first available data point in March 31, 2020, with a value of 8.57%. It increased steadily to a peak of 10.82% in December 31, 2022. From this peak, the ROA slightly declined to 9.5% by December 31, 2023, before showing a gradual recovery to 9.96% by September 30, 2024. Overall, the ROA exhibits consistent profitability with moderate fluctuations in the later periods.

Financial Leverage

Financial leverage increased significantly from 3.68 in December 31, 2020, reaching a high point of 5.56 in September 30, 2022. This period indicates increased reliance on debt or borrowed capital. Following the peak, leverage trends downward steadily to 4.01 by March 31, 2025. The decline after the peak suggests a period of deleveraging or a strategic reduction in financial risk.

Return on Equity (ROE)

Return on Equity demonstrates strong growth from March 31, 2020, starting at 31.54%, and escalating sharply to 60.21% at the end of 2022. This rapid increase coincides with the period of rising financial leverage, indicating that higher debt levels might have amplified equity returns. Following the peak, ROE declines but remains robust, stabilizing near 40.0% from December 31, 2023, through March 31, 2025. The overall pattern reveals effective equity utilization with some volatility related to leverage adjustments.

Summary

The company exhibits a period of growth in asset profitability and equity return, supported by increasing financial leverage through 2022. After reaching peaks in profitability and leverage, the company appears to strategically reduce its financial leverage, leading to more stabilized but still strong returns on equity and slightly moderated returns on assets. These trends suggest a balancing approach to managing risk and profitability over the observed periods.

Net Profit Margin

Starting from March 31, 2021, the net profit margin demonstrates a generally stable and slightly declining trend over the observed quarterly periods. It peaks at 30.06% in June 30, 2022, before gradually decreasing to a low of 26.37% by the December 31, 2023 quarter. Subsequently, it shows a slight recovery, reaching 27.82% by March 31, 2025, indicating a moderate fluctuation around the high twenties percent range.

Asset Turnover

This ratio exhibits a clear upward trend beginning in March 31, 2021, increasing from 0.31 to a peak of 0.38 in December 31, 2022 and September 30, 2023. After this peak, asset turnover stabilizes around 0.36 for subsequent quarters, with a minor dip to 0.35 near the end of the period. This pattern suggests an improvement in the efficiency of asset utilization through 2022, followed by a plateau in the following quarters.

Financial Leverage

Financial leverage ratios fluctuate over the time series with notable increases and decreases. Starting from 3.68 in December 31, 2020, there is a significant rise to 5.56 by September 30, 2022, indicating increased use of debt or equity financing. After this peak, leverage declines steadily to 4.01 by March 31, 2025, suggesting efforts to deleverage or reduce financial risk. The ratio’s volatility reflects changes in the company’s capital structure during this period.

Return on Equity (ROE)

ROE shows a marked expansion from 31.54% in March 31, 2021, to an all-time high of 60.21% in December 31, 2022, reflecting strong profitability and efficient use of equity capital. However, following this peak, there is a descending trend, declining to 39.95% by March 31, 2025. Despite this reduction, the ROE remains robust, suggesting sustained profitability albeit at a lower level than its peak performance.

Tax Burden

The tax burden ratio remains largely stable at approximately 0.77 throughout the observed periods starting from March 31, 2021, with a slight increase to 0.78 in March 31, 2024, followed by a minor decrease and stabilization around 0.77. This consistency suggests a steady effective tax rate relative to pretax income over the reporting timeline.

Interest Burden

The interest burden ratio displays minor fluctuations but generally stays in a narrow range between 0.86 and 0.88. Initial values start at 0.86 in March 31, 2021, peak at 0.88 multiple times, and settle around 0.87 towards the later periods. This indicates relatively stable interest expense management relative to earnings before interest and taxes.

EBIT Margin

The EBIT margin demonstrates some variability but remains strong overall. It starts at 41.58% in March 31, 2021, peaks at 44.19% in both March and June 2022, and then trends downward to around 39.6% by December 2023. Subsequently, it recovers gradually to above 41% by March 2025. The pattern suggests a period of margin pressure followed by a rebound, reflecting fluctuations in operational efficiency or cost structure.

Asset Turnover

Asset turnover shows a generally increasing trend from 0.31 in March 31, 2021, to a peak of 0.38 by December 2022, indicating enhanced asset utilization. However, it slightly declines and stabilizes at approximately 0.36 from late 2023 onwards, with a small dip to 0.35 by March 2025. This suggests a period of improving efficiency followed by steady asset deployment.

Financial Leverage

Financial leverage increases significantly from the beginning of the observed period, starting at 3.80 in March 31, 2021, reaching a high of 5.56 by September 30, 2022. Following this peak, leverage declines steadily to around 4.01 by March 31, 2025, indicating a deleveraging phase. Such movement reflects changing strategies in financial risk and capital structure management.

Return on Equity (ROE)

ROE experiences considerable volatility and high overall performance. Starting at 31.54% in March 31, 2021, it escalates sharply to a peak of 60.21% in December 31, 2022. After this peak, ROE decreases progressively, moving to about 39.95% by March 31, 2025. This pattern suggests a cycle of profitability expansion followed by normalization, influenced potentially by changes in operational outcomes, leverage, or tax and interest burden effects.

The analysis of the quarterly financial data reveals several notable trends across the key performance indicators of profitability and efficiency.

Net Profit Margin

The net profit margin exhibits strong performance beginning from March 2021, with values starting at 27.38% and reaching a peak of 30.06% in June 2022. Following this peak, there is a gradual decline in margin percentages, stabilizing around the mid- to high-26% range by the end of the observed period in March 2025. This indicates that while profitability as a percentage of revenue initially improved significantly, it experienced a modest downward adjustment and settled at a slightly lower but more stable level in later quarters.

Asset Turnover Ratio

This ratio demonstrates a consistent upward trend from March 2021 through December 2023, increasing from 0.31 to 0.38, suggesting improving efficiency in using assets to generate sales. Thereafter, the ratio slightly declines and remains stable around 0.35 to 0.36, indicating that the pace of asset utilization growth has plateaued. This pattern reflects an initial phase of efficiency gains followed by a maintenance phase without further significant efficiency improvements.

Return on Assets (ROA)

ROA follows an ascending trajectory up until the end of 2022, increasing from 8.57% in March 2021 to a high of approximately 10.82% in December 2022. Past this point, the ROA shows a mild downward trend, with values hovering around 9.5% to 9.96% through to March 2025. This indicates that the company improved its ability to generate profit from its assets significantly in the first half of the period analyzed, with modest declines in asset profitability occurring in the later periods.

Overall, the data indicate an initial period of robust improvement in profitability and asset utilization efficiency followed by a phase of stabilization with moderate declines in profit margins and returns relative to assets. The trends suggest the company reached a peak in operational efficiency and profitability around late 2022, with subsequent quarters reflecting a leveling off of these financial metrics.

Tax Burden

The tax burden has remained relatively stable over the reported periods, maintaining a consistent ratio close to 0.77. There is no significant fluctuation observed, indicating stable tax expense impact on earnings before taxes.

Interest Burden

The interest burden ratio shows minor variations but remains mostly steady around 0.86 to 0.88 throughout the periods. This suggests consistent interest expense relative to earnings before interest and taxes, with no noticeable increase in interest cost burden.

EBIT Margin

The EBIT margin demonstrates a mild downward trend after peaking near 44.19% in early 2022. Following this peak, the margin gradually decreased to the high 30s by the end of 2023, then shows a modest recovery, ending near 41.44% by the first quarter of 2025. This indicates some pressure on operating profitability during the mid-to-late period, with signs of improvement in the most recent quarters.

Asset Turnover

The asset turnover ratio gradually increased from around 0.31 in early 2020 to approximately 0.38 by late 2022, reflecting improved efficiency in asset utilization. However, the ratio then slightly declined to about 0.35 by the first quarter of 2025, suggesting a minor reduction in asset efficiency in the latter part of the period.

Return on Assets (ROA)

The ROA shows a positive trend initially, rising from 8.57% to peak around 10.82% by late 2022. Thereafter, ROA declines gradually to approximately 9.5% through 2023 but shows signs of recovery in the final reported quarters, reaching around 9.83% by early 2025. The pattern aligns with changes observed in EBIT margin and asset turnover, indicating that overall profitability relative to assets experienced growth, temporary decline, and moderate rebound.

Tax Burden

The tax burden ratio is consistently stable across the observed periods, maintaining a narrow range around 0.76 to 0.78. This indicates a steady proportion of income retained after taxes, with no significant fluctuations.

Interest Burden

The interest burden demonstrates minor variations yet remains relatively constant, fluctuating slightly between 0.86 and 0.88. This reflects a stable cost of debt or financing expenses relative to earnings before interest and taxes over the analyzed quarters.

EBIT Margin

The EBIT margin shows variability yet follows a gradual downward trend from a high of approximately 44.19% during early 2022 to levels around 39.6% by late 2023. Subsequently, there is a modest recovery toward 41.5% by early 2025. This pattern suggests some pressure on operating profitability during the middle periods, followed by a modest improvement.

Net Profit Margin

The net profit margin displays a trend similar to the EBIT margin, peaking near 30% in mid-2022, and then generally declining to around 26.3%-26.5% in late 2023. Thereafter, the margin gradually improves to nearly 27.8% by early 2025. This indicates some contraction in bottom-line profitability during the mid-term, with signs of recovery toward the end of the period.