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Union Pacific Corp. (UNP) Up on Q4 Earnings Beat

Zacks Equity Research

Union Pacific Corporation's UNP fourth quarter 2016 earnings of $1.39 beat the Zacks Consensus Estimate of $1.34 per share. The bottom-line climbed 6.11% on a year-over-year basis.

The bottom-line was aided by lower costs. The earnings beat pleased the investors. As a result, the stock gained in early trading.

Operating revenues of $5,168 million edged past the Zacks Consensus Estimate of $5,143.6 million. Revenues declined 1% on a year over year basis. The bulk of revenues at Union Pacific are derived from freight. A 1% decline in freight revenues contributed to the top line declining year–over–year basis.

Declining coal shipments weighed on the company's results yet again. Volumes slipped 3%, with coal playing the biggest culprit. Lower fuel surcharge revenues also hurt results.

Operating income in the fourth quarter climbed 2% year over year to $2 billion. Operating ratio (defined as operating expenses as a percentage of revenues) came in at 62% as compared to 63.2% a year ago. During the quarter, the company bought back $9.6 million shares for $940 million.

Segment Details

Agricultural Products freight revenues were $961 million, up 7% year over year. Business volumes increased 8% year over year, while average revenue per car was flat.

Automotive accounted for $517 million of freight revenues, down 6% year over year. Business volumes were down 3% and average revenue per car also fell 3% year over year.

Chemicals contributed $857 million to freight revenues, flat year over year. Volumes were down 5%, while average revenue per car improved 4%.

Coal revenues (freight) decreased 6% year over year to $699 million. Volumes declined 9% and average revenue per car improved 4% year over year.

Industrial Products generated freight revenues of $829 million, down 2% year over year on an 5% volume decline. Average revenue per car was up 4%.

Intermodal segment freight revenues came in at $969 million, flat year over year. Volumes declined 1% year over year. However, average revenue per car improved 1%.

Other revenues declined 3% to $336 million in the fourth quarter of 2016.

Union Pacific Corp. Price, Consensus and EPS Surprise

 

Union Pacific Corp. Price, Consensus and EPS Surprise | Union Pacific Corp. Quote

Liquidity

Union Pacific exited 2016 with cash and cash equivalents of $1,277 million, compared with $1,391 million at the end of 2015. Long-term debt stood at $14.25 billion at the end of 2016 compared with $13.61 billion at the end of 2015. Adjusted debt-to-capitalization ratio increased to 47.3% from 45.7% at 2015-end.

Upcoming Releases

Investors interested in the railroad space are keenly awaiting for fourth-quarter earnings reports from key players like Canadian National Railway Company CNI, Norfolk Southern Corp. NSC and Kansas City Southern KSU in the coming days. Kansas City Southern is scheduled to report on Jan 20, while Canadian National and Norfolk Southern are scheduled to report on Jan 24 and Jan 25, respectively.

Zacks Rank

Union Pacific currently carries a Zacks Rank # 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Kansas City Southern (KSU): Free Stock Analysis Report
 
Union Pacific Corp. (UNP): Free Stock Analysis Report
 
Canadian National Railway Co. (CNI): Free Stock Analysis Report
 
Norfolk Southern Corp. (NSC): Free Stock Analysis Report
 
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