Union Pacific (NYSE:UNP), the nation's largest railroad, can trace its roots to legislation signed by Abraham Lincoln way back in 1862. Today, its parent company reported a fifth straight year of revenue growth. Is it time to climb aboard?

In the fourth quarter, operating revenues and operating income steamed 5% higher. For the full-year 2003, operating revenues were up 4%, however, operating income fell 5%. For a stock trading at 16 times trailing earnings (from continuing operations), that seems a dear price for relatively slow growth.

Before opting to wait for the next train, consider what Union Pacific has going for it in an extremely capital-intensive railroad business.

In November, the company unloaded Overnite (NASDAQ:OVNT), a less-than-truckload carrier it acquired back in 1986. The more than $600 million net proceeds inflated after-tax net income but should also allow the company to cut its long-term debt. (Neither balance sheet, nor cash flow statement was released with earnings -- an oversight that drives Fools crazy -- so actual debt levels are not yet available.)

Consider, too, that railroads benefit from an improving economy.

Relative to its peers, Union Pacific looks fairly priced. Burlington Northern Santa Fe (NYSE:BNI) sells at a comparable price-to-earnings multiple, but has slightly lower operating margins and an aggressive $1.7 billion capital spending plan for 2003.

CSX (NYSE:CSX) boasts a significantly higher P/E, partly because one-time events produced a loss last quarter. The company has also struggled with operating efficiency issues. Norfolk Southern (NYSE:NSC) sells for 18 times trailing earnings, a 16% premium to Union Pacific.

You buy railroad stocks for slow, steady growth. Had you purchased Union Pacific at the open of trading in January 1982, you would have enjoyed an 11.42% compounded annual return (including dividends) through 2003. Looking back, that's not so stodgy, after all.

Twenty some-odd years later, Union Pacific sells for a premium to its growth rate, but looks poised to grow along with the economy. Even better, it pays you 1.8% per year to ride along.

If you like dividends, you'll love Matthew Emmert's Income Investor. W.D. Crotty has been in the Union Pacific dividend reinvestment plan (DRIP) for over 20 years. You can e-mail W.D. at wdcrotty@fool.com.