Union Pacific Corporation (UNP) vs Verizon Communications Inc. (VZ): Which Is the Better Buy in 2026?
As of 2026-06-19, UNP is overvalued at $257, with a DCF intrinsic value of $224 and a margin of safety of -14%. VZ is overvalued at $45, with an intrinsic value of $40 and a margin of safety of -14%. Of the two, VZ has the wider margin of safety.
Rewards
- ★Union Pacific Corporation has maintained ROIC above 10% for 4 consecutive years, suggesting solid business economics.
- ★Union Pacific Corporation scores 80/100 on the Economic Moat Score (Wide Moat), with margin stability as the strongest competitive dimension.
- ★Return on equity has consistently exceeded 20% over 4 years, indicating efficient use of shareholder capital.
- ★Free cash flow has grown at a 23.7% CAGR over the past 4 years, demonstrating strong earnings power growth.
- ★FCF yield of 10.4% is historically attractive — the business generates significant cash relative to its price.
- ★PEG ratio of 0.88 suggests the stock is undervalued relative to its growth rate — paying less than 1x for each unit of earnings growth.
Risks
- ⚠Each dollar of retained earnings has produced only $0.15 of earning power — shareholders may have been better served by dividends.
- ⚠PEG ratio of 3.27 indicates the stock is expensive relative to its expected growth — the market may be pricing in more growth than analysts project.
- ⚠High leverage (1.57x net debt/equity) combined with thin interest coverage (-1.0x) poses financial risk.
- ⚠High leverage (1.84x net debt/equity) combined with thin interest coverage (-1.0x) poses financial risk.
- ⚠Altman Z-Score of 1.24 places the company in the distress zone — financial patterns resemble those of companies that experienced bankruptcy.
- ⚠Insiders have sold $3.5M worth of stock in the past 3 months — significant insider liquidation.
Key Valuation Metrics
Learn more →Historical Fundamentals
Learn more →Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
$1 Retained Earnings Test
Learn more →> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Discounted Cash Flow (DCF) Analysis
Learn more →Reverse DCF — Market-Implied Growth
Learn more →What growth rate is the market pricing in at $257?
The market implies +11.1% Owner Earnings growth, above historical trends.
Standard FCF implies a demanding +14.6%, reflecting heavy growth investment.
What growth rate is the market pricing in at $45?
The market implies +8.5% Owner Earnings growth, above historical trends.
Standard FCF implies a demanding +7.3%, reflecting heavy growth investment.
Economic Moat Score
Learn more →Wide moat driven primarily by margin stability. Reinvestment Efficiency is the area most vulnerable to competitive pressure.
Narrow moat with margin stability as the key competitive advantage. Improving roic consistency would strengthen the moat.
Forensic Accounting
Learn more →M-Score Trend
M-Score Trend
Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.
Ownership Breakdown
Learn more →High insider ownership aligns management incentives with shareholders. Institutional concentration can indicate smart-money conviction but also crowding risk.
Insider Buying Activity
Learn more →Open market purchases · includes direct & indirect ownership · excludes option exercises.
Insider Selling Activity
Learn more →Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives.
🎭 Mr. Market's Mood
Learn more →"Market is pricing this stock without strong emotion in either direction"
"Market is pricing this stock without strong emotion in either direction"
Composite sentiment score based on market signals. Inspired by Buffett’s "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.
⚖️ Buffett Signal
Learn more →The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
Frequently Asked Questions: UNP vs VZ
Is Union Pacific Corporation or Verizon Communications Inc. more undervalued in 2026?▼
Based on our discounted cash flow model, VZ trades at a -13.8% margin of safety (intrinsic value $40 vs. price $45), compared to UNP's -14.5% margin of safety (intrinsic $224 vs. $257).
Which stock has a wider economic moat, Union Pacific Corporation or Verizon Communications Inc.?▼
UNP scores 80/100 (Wide moat), while VZ scores 55/100 (Narrow moat). The moat score measures competitive advantage durability across ROIC consistency, margin stability, revenue predictability, and reinvestment efficiency.
Is Verizon Communications Inc. in financial distress?▼
VZ's Altman Z-Score of 1.2 places it in the Distress zone, signaling elevated bankruptcy risk. UNP scores 3.8 (Safe zone). The Altman Z-Score is a five-factor model that predicts insolvency within two years; scores below 1.81 indicate significant distress.
Which company has better free cash flow, Union Pacific Corporation or Verizon Communications Inc.?▼
Verizon Communications Inc. (VZ) generates a 10.4% free cash flow yield, compared to Union Pacific Corporation's 3.6%. A higher FCF yield means the business converts more of its market value into cash that can be returned to shareholders or reinvested.
Which stock has higher return on invested capital, Union Pacific Corporation or Verizon Communications Inc.?▼
UNP earns 15.5% ROIC versus VZ's 9.1%. A higher ROIC means the company generates more profit per dollar of capital employed, a hallmark of durable competitive advantage in Buffett-style analysis.
Which dividend is safer, Union Pacific Corporation's or Verizon Communications Inc.'s?▼
UNP's dividend earns a safety score of 94/100 (Very Safe), compared to VZ's 84/100 (Very Safe). UNP has raised its dividend for 3 consecutive years.