Union Pacific sets $20B stock buyback
Written by Railway Age Staff
The biggest Class I railroad announced a double-helping of good news this week, but it was aimed mostly at Wall Street.
Union Pacific Corp. plans to buy back about $20 billion in stock from 2018 to 2020.
The Omaha-based carrier is also targeting a full-year operating ratio of 60% by 2020, with an ultimate goal of 55%.
It expects positive freight volume growth over that time, the carrier said in a presentation to investors May 31 in Omaha, reversing the 11% decline between 2015-17.
Capital expenditures will remain at or below 15% of revenue for the foreseeable future – including an estimated $3.3 billion in 2018.
The company expects to reach targeted adjusted debt-to-pretax ratio of up to 2.7 over the next two to three years, while aiming to maintain investment-grade credit ratings of at least Baa1 by Moody’s and BBB+ by Standard & Poors.
That didn’t stop S&P late Thursday from lowering its corporate credit rating on Union Pacific to A- from A, because credit metrics will be weakened on incremental debt partly used to fund the $20 billion share repurchase.
