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Union Pacific Scales a 52-Week High on Impressive Q2 Results

Shares of leading passenger and cargo carrier, Union Pacific Corporation (UNP) hit a new 52-week high of $105.87 on Aug 21, 2014. However, the company ended yesterday’s trading session a trifle lower at $105.87, reflecting a solid 41.5% return over the past 12 months.

Union Pacific’s diverse franchise and strong value proposition will offer growth opportunities across various sectors as the economy continues to expand. Apart from volume growth, core pricing above inflation will also lead to margin expansion and strong returns to shareholders. The company is progressing well with its operating and productivity improvement initiatives and has achieved a second-quarter 2014 operating ratio of 63.5%, which makes management confident of a sub 65% operating ratio before 2017.

Recently, Union Pacific reported strong second-quarter 2014 results, beating both the top and bottom line of the Zacks Consensus Estimate. The company expects to grow on increased grain shipments, continued demand for ethanol, imported beer delivery and recovery in housing starts going forward. Strength in construction products along with increased drilling activities will also boost the industrial product business.

Notably, in the past one year, Union Pacific reported impressive quarterly numbers. In two of the last four quarters, the company surpassed the Zacks Consensus Estimate, with an average earnings beat of 1.15%, including a positive surprise of 0.7% in the previously concluded quarter. Over the last 30 days, the company witnessed strong upward earnings estimate revisions for the current quarter leading a 1.4% rise in the Zacks Consensus Estimate to $1.48. Likewise, for the current year, the company witnessed upward earnings estimate revisions translating into a 9.7% hike in the Zacks Consensus Estimate to $5.53.

Union Pacific currently has a Zacks Rank #3 (Hold). Other stocks that warrant a look in this sector include Trinity Industries Inc. (TRN), GATX Corp. (GMT) and Canadian Pacific Railway Ltd (CP). Trinity Industries sports a Zacks Rank #1 (Strong Buy), while GATX Corp. and Canadian Pacific Railway carry a Zacks Rank #2 (Buy).

Read the Full Research Report on GMT
Read the Full Research Report on UNP
Read the Full Research Report on CP
Read the Full Research Report on TRN

Zacks Investment Research